Supreme Court of the State of Washington
Opinion Information Sheet
Docket Number: 67626-7
Title of Case: In the Matter of the Estate Of: David Egelhoff,
v.
Samantha Egelhoff, et al., V. Donna Rae Egelhoff
File Date: 11/18/1999
Oral Argument Date: 10/14/1999
SOURCE OF APPEAL
----------------
Appeal from Superior Court,
Pierce County;
94-4-01619-1
Honorable Karen L. Strombom, Judge.
JUSTICES
--------
COUNSEL OF RECORD
-----------------
Counsel for Petitioner(s)
Henry Haas
Mcgavick Graves P.S.
P.O. Box 1317
Tacoma, WA 98401-1317
Counsel for Respondent(s)
Michael W. Jordan
Jordan Imler & McGovern
2201 N. 30th St.
Tacoma, WA 98403
Amicus Curiae on behalf of Boeing Company
Bruce D. Corker
Perkins Coie
40th Fl
1201 3rd Ave
Seattle, WA 98101-3099
Kurt E. Linsenmayer
Attorney At Law
Perkins Coie
1201 3rd Ave Ste 40th Fl
Seattle, WA 98101-3099
Amicus Curiae on behalf of Secretary of Labor
Rochelle Kleinberg
U.S. Department of Labor
1111 Third Ave., Ste.945
Seattle, WA 98101-3207
W I. Barber
Us Department of Labor
Plan Benefit Security Div
PO Box 1914
Washington, DC 20013
Alexander Fernandez
Plan Benefits Security Division
PO Box 1914
Washington, DC 20013
Amicus Curiae on behalf of Boeing Company
Bruce D. Corker
Perkins Coie
40th Fl
1201 3rd Ave
Seattle, WA 98101-3099
Kurt E. Linsenmayer
Attorney At Law
Perkins Coie
1201 3rd Ave Ste 40th Fl
Seattle, WA 98101-3099
Amicus Curiae on behalf of Boeing Company Employee Benefit Plan
Bruce D. Corker
Perkins Coie
40th Fl
1201 3rd Ave
Seattle, WA 98101-3099
Kurt E. Linsenmayer
Attorney At Law
Perkins Coie
1201 3rd Ave Ste 40th Fl
Seattle, WA 98101-3099
Amicus Curiae on behalf of Puget Sound Energy Inc
Bruce D. Corker
Perkins Coie
40th Fl
1201 3rd Ave
Seattle, WA 98101-3099
Kurt E. Linsenmayer
Attorney At Law
Perkins Coie
1201 3rd Ave Ste 40th Fl
Seattle, WA 98101-3099
Amicus Curiae on behalf of Safeco Corporation
Bruce D. Corker
Perkins Coie
40th Fl
1201 3rd Ave
Seattle, WA 98101-3099
Kurt E. Linsenmayer
Attorney At Law
Perkins Coie
1201 3rd Ave Ste 40th Fl
Seattle, WA 98101-3099
Amicus Curiae on behalf of Weyerhaeuser Company
Bruce D. Corker
Perkins Coie
40th Fl
1201 3rd Ave
Seattle, WA 98101-3099
Kurt E. Linsenmayer
Attorney At Law
Perkins Coie
1201 3rd Ave Ste 40th Fl
Seattle, WA 98101-3099
Amicus Curiae on behalf of Wstla Foundation
Bryan P. Harnetiaux
517 E 17th Ave
Spokane, WA 99203-2210
Debra L. Stephens
6210 E Lincoln Ln
Spokane, WA 99207-9220
Amicus Curiae on behalf of Sheet Metal Workers'national Pension
Mark E. Brennan
Webster Mrak & Blumberg
600 Puget Sound Plaza
1325 Fourth Avenue
Seattle, WA 98101
Terence G. Craig
601 N Fairfax St
Suite 425
Alexandria, VA 22314
Brian D. Black
601 N Fairfax St
Suite 425
Alexandria, VA 22314
IN THE SUPREME COURT OF THE STATE OF WASHINGTON
)
IN THE MATTER OF THE ESTATE ) Number 67626-7
OF DAVID A. EGELHOFF, )
DECEASED; SAMANTHA EGELHOFF, )
A MINOR BY AND THROUGH HER )
NATURAL PARENT KATE BREINER; )
AND DAVID EGELHOFF, )
A SINGLE PERSON, )
) En Banc
Respondents )
)
v. )
)
DONNA RAE EGELHOFF AND )
JOHN DOE EGELHOFF, )
WIFE AND HUSBAND, )
)
Petitioners ) Filed November 18, 1999
)
SMITH, J. Petitioner Donna Rae Egelhoff, recently divorced former
spouse of Decedent David A. Egelhoff, seeks review of a decision of the
Court of Appeals, Division II, which reversed orders of summary judgment
granted by the Pierce County Superior Court in her favor in an action by
Respondents, Samantha Egelhoff and David Egelhoff (David A. Egelhoff, Jr.),
children of decedent from a prior marriage.1 The Court of Appeals reasoned
the children of decedent were entitled to the benefits of decedent's
pension plan and employment-based life insurance policy under RCW
11.07.010, and that the federal Employee Retirement Income Security Act
(ERISA), 29 U.S.C.sec.sec. 1001-1461, did not preempt a state statute which
revoked entitlement of a former spouse to life insurance proceeds and
pension plan benefits upon dissolution of a marriage. We affirm.
QUESTION PRESENTED
The question presented in this case is whether under RCW 11.07.010
Decedent David A. Egelhoff's designation during their marriage of his then-
spouse, Donna Rae Egelhoff, as beneficiary of his pension plan and
employment-based life insurance policy was revoked upon dissolution of
their marriage and whether any disposition under the insurance policy and
pension plan is preempted by ERISA.
STATEMENT OF FACTS
The facts in this case are stipulated.2 Decedent David A. Egelhoff
and Donna Rae Egelhoff were married on November 4, 1988 in Tacoma,
Washington.3 They separated on October 1, 1993.4
During their four and one-half year marriage, Decedent David A.
Egelhoff designated Donna Rae Egelhoff as beneficiary under his Disability
and Life Insurance Plan5 and his Defined Contribution Profit Sharing Plan,6
jointly provided by him and his employer, the Boeing Company.7
The parties stipulated that ERISA governs administration of David A.
Egelhoff's Boeing life insurance policy and pension plan. Petitioner Donna
Rae Egelhoff filed a pro se petition for dissolution of marriage in the
Pierce County Superior Court on December 30, 1993.8 A decree of
dissolution was entered on April 22, 1994.9 In a document incorporated in
the decree,10 David A. Egelhoff was awarded "100% of his Boeing retirement
401K and IRA."11
On June 23, 1994, two months after the dissolution, Decedent David
A. Egelhoff was injured in an automobile accident.12 He died from his
injuries on July 8, 1994.13 He died intestate.14 At the time of his
death, Donna Rae Egelhoff remained beneficiary of record under both his
life insurance policy and his pension plan.15 Decedent was paying court
ordered child support at the time of his death.16
The proceeds of Decedent David A. Egelhoff's life insurance plan,
totaling $46,000.00, were paid to his former spouse, Petitioner Donna Rae
Egelhoff, on
August 3, 1994.17 On November 15, 1996, decedent's statutory heirs,18
Samantha Egelhoff, a minor, and David Egelhoff, children from his first
marriage to Kate Breiner,19 filed a complaint against Donna Rae Egelhoff in
the Pierce County Superior Court to recover the proceeds of their father's
life insurance which had been paid to her.20 She filed her answer on
August 6, 1997, asserting the heirs' claims are preempted by ERISA, 29
U.S.C. sec. 1144(a).21 She then filed a motion for summary judgment on
August 27, 1997.22 The heirs, relying upon RCW 11.07.010, opposed the
motion, arguing that Washington law revoked Petitioner's designation as
beneficiary under the life insurance plan.23
On October 10, 1997, the Pierce County Superior Court, the Honorable
Frederick B. Hayes, granted summary judgment in favor of Petitioner Donna
Rae Egelhoff.24 The Court concluded that David A. Egelhoff's life insurance
plan "should be administered in accordance with the Employment Retirement
Income Security Act and the designated beneficiary, Donna Rae Egelhoff
shall have all legal rights to the proceeds which have been paid thereto."25
On May 30, 1997, while asserting a claim to their father's life
insurance proceeds, the heirs also moved for summary judgment to recover
his pension plan benefits then held by Boeing.26 The Boeing Company's
employee pension plan provided that the children of the deceased become
beneficiaries if the proceeds do not pass to the named beneficiary and
there is no surviving spouse.27 Respondents claimed that under the
property distribution incorporated in the dissolution decree Petitioner
Donna Rae Egelhoff waived her right to benefits under their father's
pension plan.28
On August 8, 1997, the Pierce County Superior Court, the Honorable
Karen L. Strombom, ordered that the pension plan benefits "should be
administered in accordance with the Employment Retirement Income Security
Act of 1974 ('ERISA') and that the designated beneficiary, Donna Rae
Egelhoff shall have all legal rights thereto{.}"29 In addition, the Court
stayed the order for summary judgment on
August 15, 1997 and directed that pension plan benefits not be distributed
to any party pending outcome of the case on appeal.30
Respondents, the statutory heirs, on August 15, 1997 filed in the
Court of Appeals, Division II, an appeal of the order disposing of their
father's pension plan benefits.31 On October 22, 1997, they filed an
appeal of the order disposing of their father's life insurance benefits.32
The Court of Appeals on November 13, 1997 granted their motion for
consolidation of both cases.33 On December 23, 1998, the Court of Appeals,
Division II, the Honorable J. Robin Hunt writing, reversed the summary
judgments of the Pierce County Superior Court, concluding that RCW
11.07.010 was not preempted by ERISA.34 The Court determined the children
of Decedent David A.
Egelhoff were entitled to the benefits of his pension plan and employment-
based life insurance under that statute.35 The Court reasoned the
Washington statute did not have a "reference to" nor a "connection with"
the ERISA plan, and did not significantly affect administration of the
plan,36 thus lawfully invalidating designation of the former spouse, Donna
Rae Egelhoff, as beneficiary on any nonprobate asset held by ERISA plan
participant Decedent David A. Egelhoff at the time of dissolution of their
marriage.
Petitioner Donna Rae Egelhoff petitioned this Court for review which
was granted on June 1, 1999.37
DISCUSSION
Prior RCW 11.07.010 provided:38
(1) This section applies to all nonprobate assets, wherever
situated, held at the time of entry by a superior court of this state of a
decree of dissolution of marriage or a declaration of invalidity.
(2)(a) If a marriage is dissolved or invalidated, a provision
made prior to that event that relates to the payment or transfer at death
of the decedent's interest in a nonprobate asset in favor of or granting an
interest or power to the decedent's former spouse is revoked. A provision
affected by this section must be interpreted, and the nonprobate asset
affected passes, as if the former spouse failed to survive the decedent,
having died at the time of entry of the decree of dissolution or
declaration of invalidity.
. . . .
(5) As used in this section, "nonprobate asset" means those
rights and interests of a person having beneficial ownership of an asset
that pass on the person's death under only the following written
instruments or arrangements other than the decedent's will:
(a) A payable-on-death provision of a life insurance policy,
employee benefit plan, annuity or similar contract, or individual
retirement account{.}
. . . .
(Emphasis added.)
Petitioner claims RCW 11.07.010 is preempted by ERISA. She contends
the broad preemption provision under 29 U.S.C. sec. 1144(a) precludes
application of the state statute, RCW 11.07.010, to this case. Respondents
argue, to the contrary, that RCW 11.07.010 is not preempted by ERISA. They
assert that the statute lawfully invalidated Petitioner's status as an
ERISA plan beneficiary of their father's nonprobate assets upon dissolution
of her marriage to their father. They argue that there is consequently no
named beneficiary under their father's pension plan and life insurance
policy; and that his children should receive the benefits under his pension
plan.39 The Court of Appeals agreed with Respondents and awarded to them
their father's pension plan benefits and life insurance proceeds.
PREEMPTION
ERISA is a comprehensive federal statute which regulates employee
pension and welfare plans.40 It is designed to promote the interests of
employees and their beneficiaries in employee benefit plans.41 ERISA
contains a broad preemption provision that supersedes state laws that
"relate to" employee benefit plans. 29 U.S.C. sec. 1144(a) states "{ERISA}
shall supersede any and all State laws insofar as they . . . relate to any
employee benefit plan {covered by the statute}."42
29 U. S. C. sec. 1144(a) reads:
(a) Supersedure; effective date
Except as provided in subsection (b) of this section, the provisions
of this subchapter and subchapter III of this chapter shall supersede any
and all State laws insofar as they may now or hereafter relate to any
employee benefit plan described in section 1003(a) of this title and not
exempt under section 1003(b) of this title. This section shall take effect
on January 1, 1975.
(Emphasis added.)
In earlier United States Supreme Court cases, the Court
characterized ERISA's preemption clause as "having a broad scope"43 and an
"expansive sweep,"44 being "conspicuous {in} its breadth" and written in
"'deliberately expansive' language {that} was 'designed to "establish
pension plan regulation as exclusively a federal concern."'"45
In Shaw v. Delta Air Lines, Inc., the United States Supreme Court
concluded that state law "relates to" an employee benefit for purposes of
sec. 1144(a) "if it has a connection with or reference to such a plan."46
The Court also concluded that state law may "relate to" a benefit plan, and
consequently be preempted, "even if the law is not specifically designed to
affect such plans, or the effect is only indirect" and includes preemption
of laws that are consistent with ERISA's policies and substantive
requirements.47
This Court previously adopted the expansive interpretation of sec.
1144(a) announced by the United States Supreme Court in Ingersoll-Rand, and
has consistently held that if the court's attention must be directed to an
ERISA plan, the cause of action then "relates to" the ERISA plan.48
Recently, however, ERISA preemption analysis by the United States
Supreme Court, as evidenced by New York State Conference of Blue Cross &
Blue Shield Plans v. Travelers Ins. Co.,49 has signaled a significant
retreat from its expansive reading of sec. 1144(a). The Court in Travelers
departed from its previous direction in defining the "expansive sweep"50 of
sec. 1144(a). The Court indicated it was discarding "uncritical
literalism" in favor of the objectives of ERISA "as a guide to the scope of
the state law that Congress understood would survive."51 The Court of
Appeals, Division I, has also adopted a narrower reading of ERISA's
preemption clause.52
While the Court in Travelers again noted the expansive scope of the
language of the preemption clause, it stated, nonetheless, that "{w}e
simply must go beyond the unhelpful text and the frustrating difficulty of
defining its key term, and look instead to the objectives of the ERISA
statute."53 The basic objective of Congress, the Court concluded, "was to
avoid a multiplicity of regulation in order to permit the nationally
uniform administration of employee benefit plans."54 The Court acknowledged
its prior decisions have held that ERISA preempted state laws that mandated
employee benefit structures or their administration, as well as state laws
providing alternative enforcement mechanisms.55 But the Court did not
strike down the state law in that case56 because, while having some indirect
economic impact, the law did not bind employee plan administrators to any
particular choice of plan or preclude the uniform provision and
administration of plans.57
United States Supreme Court decisions following Travelers58 clarified
ERISA's preemptive reach to involve the "identi{fication of} the field in
which ordinary field pre-emption applies. . . and, . . . ordinary conflict
pre-emption."59 In California Div. of Labor Standard Enforcement v.
Dillingham Construction, N.A., Inc., the Court relied upon Travelers in
analyzing a state statute with the "presumption that ERISA did not intend
to supplant it."60 The Court stated that in areas traditionally left to
state regulation,61 and with which ERISA is not expressly concerned, it
would be "unsettling" to hold that state law is preempted whenever it has
an indirect effect on ERISA plans.62
Similarly, the Court in DeBuono v. NYSA-ILA Med. & Clinical Servs.
Fund concluded that ERISA did not modify the initial presumption against
preemption.63 The Court observed that the statute in that case64 neither
prohibited a method of calculating benefits that federal law permitted nor
required employers to provide certain benefits. The case was not one in
which the existence of a pension plan was critical to the state law cause
of action or in which the state statute expressly referred to ERISA plans.65
The Court noted that in past decisions describing the expansive nature of
the preemption, it had not been necessary to rely on that expansive
character in finding preemption because the state laws at issue had a clear
connection with or reference to ERISA plans.66
The effect of Travelers and its progeny favors a retreat from the
expansive preemption doctrine this Court has previously followed to ensure
ERISA's objective of protecting workers and Washington's sovereign interest
in exercising its traditional police powers in the area of domestic
relations and family law.
LIFE INSURANCE PROCEEDS
The Court of Appeals decided the issue of entitlement to Decedent
David A. Egelhoff's life insurance proceeds by reference to statutes and
case law,67 but did not consider whether decedent's life insurance plan is a
"welfare benefit plan" or a "pension benefit plan."68 Petitioner asserts
ERISA preempts RCW 11.07.010 as it relates to decedent's life insurance
plan and his pension plan. Respondents argue to the contrary that the
United States Supreme Court made a distinction between "welfare" and
"pension" plans, finding that Congress elected to regulate pension benefit
plans more rigorously than welfare plans.69 Respondents conclude that
consequently decedent's life insurance plan is a "welfare benefit plan" and
not subject to ERISA preemption under its antialienation and preemption
provisions. According to Respondents,
RCW 11.07.010 would control and invalidate Petitioner Donna Rae Egelhoff's
designation as beneficiary under Decedent David A. Egelhoff's life
insurance plan. Respondents assert they were properly awarded the proceeds
of their father's life insurance by the Court of Appeals.
Amicus Curiae Secretary of Labor70 states that ERISA's antialienation
provision, 29 U.S.C. sec. 1056(d), only involves "pension" plans and does
not involve "welfare" plans.71 A review of the ERISA statute supports this
conclusion.72 Under ERISA a "pension" plan must include provisions
prohibiting the alienation of "pension" benefits, but "welfare" plan
benefits are exempt from this requirement. We follow the reasoning of the
United States Supreme Court in Mackey v. Lanier Collection Agency & Serv.,
Inc.73 and conclude that Respondents, the children of Decedent David A.
Egelhoff, are entitled to the proceeds of his employment-based life
insurance policy.
PENSION PLAN PROCEEDS
The interpretation of "field preemption" and "conflict preemption"
clarified in Travelers is pivotal to any discussion of ERISA preemption.
In determining the scope of the "field" occupied by ERISA, federal laws
will not preempt state statutes in areas that are "remote from the areas
with which ERISA is expressly concerned-'reporting, disclosure, fiduciary
responsibility, and the like.'"74 Preemption analysis requires
consideration of the objectives of Congress in enacting ERISA-the promotion
of employee interests and the protection of those interests against
mismanagement by plan administrators.75 Effectuating the areas of ERISA's
primary concern leaves to the States the duty to regulate local matters
even when such regulation has an indirect impact upon or slight connection
with ERISA plans.76 The United States Court of Appeals for the Ninth
Circuit observed in Emard v. Hughes Aircraft Co.77 that "ERISA's preemption
clause no longer has the power to transmute into a federal question every
issue that brushes against the periphery of an ERISA plan."78 The use of a
federal statute to forbid state regulation in "areas where ERISA has
nothing to say"79 would unjustly restrain the legitimate exercise of the
states' historic police powers80 without achieving the objectives sought by
Congress.
Petitioner Donna Rae Egelhoff and amici curiae81 assert that RCW
11.07.010 does not apply to ERISA plans. This is not correct. The fact
is that the statute may apply to ERISA plans. The question is whether it
is preempted by ERISA. RCW 11.07.010 involves an area of domestic and
family law that has long been the traditional domain of the states.82 In
areas involving traditional state regulation, "the starting presumption
{is} that Congress does not intend to supplant state law."83 Petitioner has
the considerable burden of overcoming this presumption.84
A state law "relates to" an ERISA plan if it either "refers to" or
has a "connection with" such a plan.85 Under the first part of this
inquiry, "reference to" an ERISA plan means the state law must act
"immediately and exclusively" upon the ERISA plans,86 or alternatively, the
existence of ERISA plans which are "essential to the law's operation."87 It
is not sufficient that the statutory definition of nonprobate assets under
RCW 11.07.010(5)(a) merely mentions an "employee benefit plan."88 The
statute does not apply immediately and exclusively to an ERISA plan, nor is
the existence of such a plan essential to operation of the statute.89
This Court must address whether RCW 11.07.010 has a sufficient
"connection with" an ERISA plan to compel preemption. This is
characterized as "conflict preemption analysis." Generally, a state law
has a connection with an ERISA plan if it mandates plan benefit structures90
or some aspect of their administration.91 In these situations requiring
conflict preemption analysis,92 a state law which directly or indirectly
invades the core functions of ERISA regulation must give way to the
comprehensive federal scheme favored by Congress under the four-factor
approach of the Court of Appeals for the Ninth Circuit.93
However, the mere fact that RCW 11.07.010 may operate upon the
beneficiary designation in an ERISA plan is not of itself a sufficient
connection to require preemption. The statute operates under the legal
fiction that "the former spouse {did not} survive the decedent, having died
at the time of entry of the decree of
dissolution. . . ."94 Benefits under the plan remain to be distributed in
accord with the plan documents under ERISA.95 While a state statute such
as RCW 11.07.010 may bring the default distribution provisions into effect,
it does not alter the nature of the plan itself, the administrator's
fiduciary duties, or the requirements for plan administration. The
Washington Court of Appeals concluded in this case that the effect of RCW
11.07.010 upon an ERISA plan is "'too slight to overcome the presumption
against preemption of state family and family property law.'"96 We agree.
The Ninth Circuit ERISA preemption analysis currently represents a
minority view among other United States Circuit Courts,97 that Court in
Emard concluding that California law did not affect the administration of
ERISA plans but "merely the ultimate ownership of distributed benefits."98
We find that decision at least persuasive in interpreting the impact of RCW
11.07.010 in this case.
Amicus Curiae Boeing claims a "connection" exists because requiring
plan administrators to investigate the marital status of beneficiaries and
to determine whether a beneficiary designation remains valid under state
law increases the administrative burdens on the plan, with resultant
increase of costs and depletion of plan resources available for benefits to
employees.99 Similar arguments have been rejected by the United States
Supreme Court.100 Our interpretation of field preemption under Travelers101
leads us to the conclusion that RCW 11.07.010 does not "relate to" or have
a "connection with" such a plan.
Petitioner and supporting amici rely upon the amendments to ERISA in
the antialienation provision, 29 U.S.C. sec. 1056(d)(1),102 to support their
claim that under Boggs v. Boggs103 a direct conflict exists between RCW
11.07.010 and 29 U.S.C.
sec. 1056(d)(1).104 This assertion mischaracterizes the "field preemption"
analysis under Travelers.
The United States Supreme Court in Boggs determined "conflict
preemption" may defeat application of state law, without considering
whether it "relates to" an ERISA plan, if the relevant law conflicts with a
specific ERISA provision.105 The Louisiana law in that case allowed a plan
beneficiary to bequeath the beneficiary's equitable interest in benefit
plan proceeds to a third party through the beneficiary's will.106 This was
in direct contravention of the antialienation provision requiring that
proceeds be distributed solely in accordance with the plan documents or the
terms of a limited statutory exception, such as the "qualified domestic
relations order" (QDRO) exception.107
RCW 11.07.010 does not conflict with ERISA's antialienation
provision because it does not operate to divert benefit plan proceeds from
distribution under terms of the plan documents.108 Amicus Secretary of Labor
states that RCW 11.07.010 is "{l}ike the community property law in Boggs."109
That is not correct. The statute in that case directed disposition of the
proceeds of a benefit plan, and allowed plan beneficiaries to dispose of
their share of the proceeds to alternate payees by testamentary
transfer.110 The United States Supreme Court concluded the transfer was in
violation of the antialienation provision, which does not recognize state
law mechanisms for distributing plan proceeds to a third party except under
certain specific exceptions, such as when a former spouse receives benefits
of a plan under the terms of a QDRO.111
RCW 11.07.010 does not require distribution of benefit plan assets
to a third party, nor does it in any way direct payment of proceeds. It
merely invalidates designation of a former spouse as beneficiary of a non-
probate asset by creating the legal fiction that the spouse predeceased the
now-deceased owner.112 While the underlying circumstances to which the
distribution scheme of an ERISA plan must be applied is altered, the plan
administrator is not required to follow provisions for distributing the
proceeds other than those in the plan. There is no diversion of plan
benefits.113 Under federal preemption analysis, we conclude that the nexus
between participant and beneficiary in this case is not compromised.114
Despite the reality of her survival, under RCW 11.07.010 Petitioner
Donna Rae Egelhoff is legally considered to have predeceased the plan
participant, Decedent David A. Egelhoff, with the result that there is no
valid beneficiary designated in the plan. Without reliance upon any state
distribution scheme, his children and heirs, Respondents, would receive his
pension plan benefits. The resulting statutorily effected change in the
underlying circumstances for administration of the plan does not impede the
plan administrator's obligation to pay under the terms of the plan
documents. There is no conflict with the specific ERISA provision
proscribing alienation of benefits.
We conclude that RCW 11.07.010 is not preempted by ERISA. This statute,
involving domestic relations and family law, is an area of law historically
left to state control. RCW 11.07.010 does not "refer to" or have a
significant "connection with" an ERISA plan to require preemption. Nor
does RCW 11.07.010 conflict with any specific ERISA provision, including
the antialienation clause under 29 U.S.C. sec. 1056 (d)(1). Under this
reasoning, we conclude that Petitioner Donna Rae Egelhoff is not entitled
to benefits under her deceased former husband's pension plan. We need not
address the question of waiver under the property settlement incorporated
in the dissolution.
SUMMARY AND CONCLUSIONS
Petitioner Donna Rae Egelhoff's claims for benefits under Decedent
David A. Egelhoff's employment-based life insurance and pension plans were
properly denied by the Court of Appeals, Division II.
Recent United States Supreme Court cases following New York State
Conference of Blue Cross & Blue Shield Plans v. Travelers Ins. Co. lead to
the conclusion that the Court's former commitment to an expansive
interpretation of ERISA's preemptive scope is yielding to a narrowed view
of the field occupied by this statutory scheme. The effect of Travelers
and cases following justify retreat from the expansive preemption doctrine
our Court has previously followed to ensure ERISA's objective of protecting
workers and Washington's sovereign interest in exercising its traditional
police powers in the area of domestic relations and family law.
Respondents' conclusion that the decedent's life insurance plan is a
"welfare benefit plan" and not subject to ERISA preemption under its
antialienation and preemption provisions has merit. RCW 11.07.010
invalidates Petitioner Donna Rae Egelhoff's designation as beneficiary
under Decedent David A. Egelhoff's life insurance plan because she is by
legal fiction considered to have died at the time their decree of
dissolution was entered. Respondents were properly awarded the proceeds
of their father's life insurance by the Court of Appeals.
Under the interpretation of "field preemption" and "conflict
preemption" clarified in Travelers, RCW 11.07.010 does not "relate to" an
ERISA plan. This statute neither "refers to" nor has a sufficient
"connection with" an ERISA plan to justify preemption. Nor is RCW
11.07.010 directly in conflict with any specific provision of ERISA,
including the antialienation provision under 29 U.S.C. sec. 1056(d)(1).
Respondents were properly awarded the benefits under their father's pension
plan.
We affirm the decision of the Court of Appeals, Division II, which
reversed the orders of summary judgment of the Pierce County Superior
Court, and conclude that Respondents Samantha Egelhoff and David A.
Egelhoff, Jr., the children and heirs of Decedent David A. Egelhoff, are
entitled to receive the benefits under their father's pension plan and the
proceeds of his life insurance.
1 The caption of the case illogically refers to Petitioners as "Donna Rae
Egelhoff and John Doe Egelhoff, wife and husband." The Estate of David A.
Egelhoff declined to participate in this appeal.
2 Pet. for Review to Washington State Supreme Court of Court of Appeals
Decision Terminating Review, filed Jan. 27, 1999, at 1-5; see also Clerk's
Papers (No. 96-2-12626-3) at 122-24.
3 Pet. for Review at 1.
4 Id. at 2.
5 Clerk's Papers (No. 96-2-12626-3) at 100-14. (An incomplete "summary" of
the Boeing Company's Disability and Life Insurance Plan is included in the
record).
6 Clerk's Papers (No. 94-4-01619-1) at 38-52. The Boeing Company's
employee "pension plan" is also referred to as a Voluntary Investment Plan.
7 Pet. for Review at 2-5.
8 Clerk's Papers at 87 (No. 94-4-01619-1).
9 Clerk's Papers (No. 96-2-12626-3) at 61-69. David A. Egelhoff and Donna
Rae Egelhoff agreed on Findings of Fact and Conclusions of Law,
incorporating Exhibits "A" and "B." Exhibit "A" identifies property
awarded to David A. Egelhoff and Donna Rae Egelhoff individually, while
Exhibit "B" identifies liabilities of each party.
10 Id. (Exhibit "A") at 67.
11 See 26 U.S.C. sec. 401(k) and 26 U.S.C. sec. 408(a) (Definitions of
"401K" and "IRA").
12 Clerk's Papers (No. 96-2-12626-3) at 27.
13 Id.
14 Pet. for Review at 2.
15 Id. at 3-6.
16 Id.
17 Clerk's Papers (No. 96-2-12626-3) at 95-97.
18 See RCW 11.04.015, which provides in pertinent part:
"11.04.015 Descent and distribution of real and personal estate. The net
estate of a person dying intestate, or that portion thereof with respect to
which the person shall have died intestate, shall descend subject to the
provisions of RCW 11.04.250 and 11.02.070, and shall be distributed as
follows:
". . . .
"(2) Shares of others than surviving spouse. The share of the net estate
not distributable to the surviving spouse, or the entire net estate if
there is no surviving spouse, shall descend and be distributed as follows:
"(a) To the issue of the intestate; if they are all in the same degree of
kinship to the intestate, they shall take equally, or if of unequal degree,
then those of more remote degree shall take by representation.
". . . ."
19 Pet. for Review at 2.
20 Clerk's Papers (No. 96-2-12626-3) at 1-5.
21 Id. at 6-10.
22 Id. at 11-12.
23 Id. at 13-26 (The heirs also submitted to the trial court a certified
statement of Kate Breiner purporting to establish that "D{onna} E{gelhoff}
knew that D{avid} E{gelhoff} intended to remove her as beneficiary and that
it was the apparent agreement of D{onna} E{gelhoff} and the decedent.").
24 Id. at 42-44.
25 Id. at 43.
26 Clerk's Papers (No. 94-4-01619-1) at 1-2.
27 Id. at 45.
28 Respondents valued their father's pension plan benefits on May 28, 1997
at $35,000.00, subject to federal taxes. Id. at 6-22.
29 Id. at 115.
30 Id. at 117-18.
31 Id. at 120.
32 Notice of Appeal to Court of Appeals, Division II (No. 96-2-12626-3)
filed Oct. 22, 1997.
33 Letter of the Clerk of the Court of Appeals, Division II, dated Nov. 13,
1997.
34 In re Estate of Egelhoff, 93 Wn. App. 314, 968 P.2d 924 (1998), review
granted, 137 Wn.2d 1032 (1999).
35 Id. at 327.
36 Id. at 324-25.
37 Order Granting Pet. for review (No. 67626-7) dated June 1, 1999.
38 Laws of 1993, ch. 236, sec. 1 (emphasis added). The statute was amended
in 1994 and 1997, but the amendments are not relevant to this case.
39 David A. Egelhoff's Voluntary Investment {pension} plan provides:
"The VIP Office will only recognize beneficiary designations and changes
that are filed on the official VIP beneficiary designation form and
received before your death. You may not designate or change a beneficiary
by using other documents such as divorce decrees, prenuptial agreements,
wills or trusts. If you have not designated a beneficiary on the
appropriate form, you have an invalid beneficiary designation, or your
beneficiary is no longer living, benefits will be paid in the following
sequence:
"1. To your surviving spouse.
"2. If there is no surviving spouse, to your children in equal shares.
"3. To another relative designated by the Voluntary Investment Plan
Committee or to your estate."
Clerk's Papers (No. 94-4-01619-1) at 45.
40 29 U.S.C. sec.sec. 1001-1461. See Cutler v. Phillips Petroleum Co., 124
Wn.2d 749, 756, 881 P.2d 216 (1994), cert. denied, 515 U.S. 1169, 115 S.
Ct. 2634, 132 L. Ed. 2d 873 (1995).
41 Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 90, 103 S. Ct. 2890, 2896, 77
L. Ed. 2d 490 (1983); see 29 U.S.C. sec. 1001(b).
42 Additional United States Supreme Court cases broadly interpreting ERISA's
preemption language include: Shaw v. Delta Air Lines, Inc., 463 U.S. 85,
90, 103 S. Ct. 2890, 2896, 77 L. Ed. 2d 490 (1983); Mackey v. Lanier
Collection Agency & Serv., Inc., 486 U.S. 825, 829, 108 S. Ct. 2182, 100 L.
Ed. 2d 836 (1988); District of Columbia v. Greater Wash. Bd. of Trade, 506
U.S. 125, 113 S. Ct. 580, 121 L. Ed. 2d 513 (1992); Morales v. Trans World
Airlines, Inc., 504 U.S. 374, 384, 112 S. Ct. 2031, 119 L. Ed. 2d 157
(1992).
43 Metropolitan Life Ins. Co. v. Massachusetts, 471 U.S. 724, 739, 105 S.
Ct. 2380, 2388-89, 85 L. Ed. 2d 728 (1985).
44 Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 47, 107 S. Ct. 1549, 1552-
53, 95 L. Ed. 2d 39 (1987).
45 Ingersoll-Rand Co. v. McClendon, 498 U.S. 133, 138, 111 S. Ct. 478, 112
L. Ed. 2d 474 (1990) (quoting FMC Corp. v. Holliday, 498 U.S. 52, 58, 111
S. Ct. 403, 407, 112 L. Ed. 2d 356 (1990) and Pilot Life Ins. Co., 481 U.S.
at 46) (quoting Alessi v. Raybestos-Manhattan, Inc., 451 U.S. 504, 523, 101
S. Ct. 1895, 68 L. Ed. 2d 402 (1981)).
46 Shaw, 463 U. S. at 97.
47 Id.
48 Cutler, 124 Wn.2d at 763 (quoting Ingersoll-Rand, 198 U.S. at 140); see
also Puget Sound Elec. Workers Health & Welfare Trust Fund v. Merit Co.,
123 Wn.2d 565, 568-70, 870 P.2d 960 (1994); Boutillier v. Libby, McNeill &
Libby, Inc., 42 Wn. App. 699, 713 P.2d 1110, review denied, 106 Wn.2d 1005
(1986).
49 514 U.S. 645, 115 S. Ct. 1671, 131 L. Ed. 2d 695 (1995).
50 Pilot Life Ins. Co., 481 U.S. at 47.
51 Travelers, 514 U.S. at 656.
52 See Kahn v. Salerno, 90 Wn. App. 110, 951 P.2d 321 (1998); Ironworkers
Dist. Council v. Woodland Park Zoo Planning & Dev., 87 Wn. App. 676, 942
P.2d 1054 (1997).
53 Travelers, 514 U.S. at 656.
54 Id. at 657.
55 Id. at 658.
56 The New York statute, N.Y. McKinney's Public Health Law sec. 2807-c,
required hospitals to collect surcharges from patients covered by
commercial insurers but not those covered by Blue Cross or Blue Shield
Plans.
57 Id. at 659-60.
58 See California Div. of Labor Standard Enforcement v. Dillingham
Construction, N.A., Inc., 519 U.S. 316, 117 S. Ct. 832, 136 L. Ed. 2d 791
(1997); see also John Hancock Mutual Life Ins. Co. v. Harris Trust & Sav.
Bank, 510 U.S. 86, 99, 114 S. Ct. 517, 126 L. Ed. 2d 524 (1993).
59 Dillingham, 519 U.S. at 336 (Scalia, J., concurring) (emphasis omitted)
("Relate to" is not a test for preemption but simply an identification of
the field in which ordinary field preemption applies-the field of laws
regulating employee benefit plans).
60 Id. at 331-32. (The Court upheld a law prohibiting payment of lower
wages to apprentices trained in unapproved programs).
61 Stating an "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." Id. at 325 (quoting Rice v. Santa Fe
Elevator Corp., 331 U.S. 218, 230, 67 S. Ct. 1146, 1152, 91 L. Ed. 1447
(1947)); see also Gade v. National Solid Wastes Mgmt Ass'n, 505 U.S. 88,
98, 112 S. Ct. 2374, 2383, 120 L. Ed. 2d 73 (1992) (State law is preempted
by ERISA where it is "an obstacle to the accomplishment and execution of
the full purposes and objectives of Congress").
62 Dillingham, 519 U.S. at 330-31.
63 520 U.S. 806, 117 S. Ct. 1747, 138 L. Ed. 2d 21 (1997).
64 DeBuono, 520 U.S. at 809. (The statute, N.Y. McKinney's Public Health
Law sec.2807-d, imposed a tax on a medical center operated with ERISA
funds).
65 Id. at 814-15.
66 Id. at 813.
67 Egelhoff, 93 Wn. App. at 320-21. The Court of Appeals relied upon the
Uniform Simultaneous Death Act (USDA), chapter 11.05 RCW, and RCW 48.18.390
(beneficiary treated as having predeceased policyholder, leaving life
insurance proceeds to the policyholder's estate) and case law (statutory
heirs inherit the life insurance policy proceeds when policyholder dies
intestate).
68 See Br. of Appellant, Court of Appeals, Division II, at 34-36; see 29
U.S.C.
sec. 1002(3) which states "{t}he term "employee benefit plan" or "plan"
means an employee welfare benefit plan or an employee pension benefit plan
. . .".
69 Id. at 35 (citing Mackey v. Lanier Collection Agency & Serv., Inc., 486
U.S. 825, 829, 108 S. Ct. 2182, 100 L. Ed. 2d 836 (1988); Equitable Life
Assurance Society of the U.S. v. Crysler, 66 F.3d 944 (8th Cir. 1995).
70 Briefs Amicus Curiae were filed in support of Appellant Donna Rae
Egelhoff's petition for review by the Secretary of Labor; the Boeing
Company; the Boeing Company Employee Benefit Plans Committee; Puget Sound
Energy, Inc.; Safeco Corporation; Weyerhaeuser Company; the Sheet Metal
Workers' National Pension Fund; and the Washington State Trial Lawyers
Association.
71 Amicus Br. of the Secretary of Labor at 11.
72 The antialienation provision of ERISA, 29 U.S.C. sec. 1056(d)(1), states
"{e}ach pension plan shall provide that benefits provided under the plan
may not be assigned or alienated." 29 U.S.C.sec. 1051(1) "appl{ies} to any
employee benefit plan . . . other than¿(1) an employee welfare benefit
plan{.}" Under 29 U.S.C. sec. 1002(1) is "{t}he terms 'employee welfare
benefit plan' and 'welfare plan' mean any plan, fund, or program . . .
established or . . . maintained for the purpose of providing for its
participants or their beneficiaries, through the purchase of insurance or
otherwise, (A) medical, surgical, or hospital care or benefits, or benefits
in the event of sickness, accident, disability, death or unemployment . .
.."
73 486 U.S. 825, 108 S. Ct 2182, 100 L. Ed. 2d 836 (1988).
74 Dillingham, 519 U.S. at 330 (quoting Travelers, 514 U.S. at 661).
75 Massachusetts v. Morash, 490 U.S. 107, 114, 109 S. Ct. 1668, 104 L. Ed.
2d 98 (1989).
76 See Travelers, 514 U.S. at 661-62.
77 153 F.3d 949 (9th Cir. 1998), cert. denied, 119 S. Ct. 903, 142 L. Ed. 2d
902 (1999).
78 Emard, 153 F.3d at 961.
79 Dillingham, 519 U.S. at 330.
80 Rice, 331 U.S. at 230.
81 Amicus Curiae Washington State Trial Lawyers Association does not join in
these assertions.
82 Boggs v. Boggs, 520 U.S. 833, 840, 117 S. Ct. 1754, 117 L. Ed. 2d 45
(1997); See Hisquierdo v. Hisquierdo, 439 U.S. 572, 581, 99 S. Ct. 802,
808, 59 L. Ed. 2d 1 (1979); see also Rose v. Rose, 481 U.S. 619, 107 S. Ct.
2029, 95 L. Ed. 2d 599 (1987).
83 Travelers, 514 U.S. at 654-55.
84 DeBuono, 520 U.S. at 814.
85 Shaw, 463 U.S. at 96-97.
86 Mackey, 486 U.S. at 830 (A Georgia anti-garnishment statute which applied
solely to ERISA pension plans had a sufficient "reference to" ERISA plans,
while a garnishment statute, general in scope, which applied to both ERISA
and non-ERISA plans did not).
87 Dillingham, 519 U.S. at 325.
88 As in Dillingham, the Court rejected the argument that mention of "joint
apprenticeship committee" related to ERISA plans where approved class of
apprenticeship sponsors also included non-ERISA plans.
89 See Emard, 153 F.3d at 954.
90 See Shaw, 463 U.S. at 97 (ERISA preempted New York laws prohibiting
employers from structuring benefit plans in a way that discriminated on the
basis of pregnancy, and mandated payment of other specific benefits).
91 Travelers, 514 U.S. at 657-58.
92 Conflict preemption analysis requires a two-step inquiry to determine (1)
whether the state law at issue conflicted with any specific provision of
ERISA and (2) whether application of the state law would frustrate
Congress' purpose in enacting ERISA. See Emard, 153 F.3d at 957-59.
93 The United States Court of Appeals for the Ninth Circuit in Aloha
Airlines, Inc. v. Ahue, 12 F.3d 1498, 1504 (9th Cir. 1993), identified four-
factors to determine whether a state law has a "connection with" an ERISA
benefit plan: "(1) whether the state law regulates the types of benefits of
ERISA employee welfare benefit plans. . . ; (2) whether the state law
requires the establishment of a separate employee benefit plan to comply
with the law. . .; (3) whether the state law imposes reporting, disclosure,
funding, or vesting requirements for ERISA plans. . .; and (4) whether the
state law regulates certain ERISA relationships, including the
relationships between an ERISA plan and employer and, to the extent an
employee benefit plan is involved, between the employer and employee." Id.
at 958 (citations omitted).
94 RCW 11.07.010(2)(a).
95 29 U.S.C. sec. 1104(a)(1)(D) provides in pertinent part that "(1) . . . a
fiduciary shall discharge his duties with respect to a plan solely in the
interest of the participants and beneficiaries and-(A) for the exclusive
purpose of: . . . (D) in accordance with the documents and instruments
governing the plan insofar as such documents and instruments are consistent
with the provisions of this subchapter . . . ."
96 Egelhoff, 93 Wn. App. at 326 (quoting Emard, 153 F.3d at 959).
97 See Metropolitan Life Ins. Co. v. Pettit, 164 F.3d 857 (4th Cir.1998);
Mattei v. Mattei, 126 F.3d 794 (6th Cir. 1997), cert. denied, U.S. ,
118 S. Ct. 1799, 140 L. Ed. 2d 939 (1998); Brandon v. Travelers Ins. Co.,
18 F.3d 1321 (5th Cir. 1994); Krishna v. Colgate Palmolive Co., 7 F.3d 11
(2d Cir. 1993); Metropolitan Life Ins. Co. v. Hanslip, 939 F.2d 904 (10th
Cir. 1991); MacLean v. Ford Motor Co., 831 F.2d 723 (7th Cir. 1987).
98 Emard, 153 F.3d at 959.
99 See Br. of Amici Curiae Boeing Co. et al. at 6-11.
100 See Travelers, 514 U.S. at 659-61 (Preemption rejected based on indirect
economic influence on plan administration). DeBuono, 520 U.S. at 815-17.
(Direct tax reducing fund assets that would otherwise be available to
provide plan members with benefits was not sufficiently connected to ERISA
plans to require preemption. "Any state tax, or other law, that increases
the cost of providing benefits to covered employees will have some effect
on the administration of ERISA plans, but that simply cannot mean that
every state law with such an effect is pre-empted by the federal
statute.").
101 The Court in Travelers recognized the possibility that "a state law might
produce such acute, albeit indirect, economic effects, by intent or
otherwise, as to force an ERISA plan to adopt a certain scheme of
substantive coverage or effectively restrict its choice of insurers, and
that such a state law might indeed be pre-empted." Id. at 668. As stated
by the Court of Appeals and argued by the Respondents, such "major damage"
to ERISA's objectives cannot be shown because of RCW 11.07.010. Egelhoff,
93 Wn. App. at 326 (quoting Hisquierdo, 439 U.S. at 581); see Supplemental
Br. of Resp'ts at 2-6, 15; see Amicus Br. of the Wash. State Trial Lawyers
Ass'n at 12.
102 29 U.S.C. sec. 1056(d)(1) states that "{e}ach pension plan shall provide
that benefits provided under the plan may not be assigned or alienated."
29 U.S.C.
sec. 1056(d)(3)(A) "appl{ies} to the creation, assignment, or recognition
of a right to any benefit payable with respect to a participant pursuant to
a domestic relations order, except that paragraph (1) shall not apply if
the order is determined to be a "qualified domestic relations order." See
29 U.S.C. sec. 1056(d)(3)(B)(i) (defining a "qualified domestic relations
order"). In general, the antialienation provision restricts diversion of
plan benefits to someone other than a payee under the plan documents,
unless executed in a specified manner to be recognized as a "qualified
domestic relations order" (QDRO). See 29 U.S.C. sec. 1056(d)(3) (A).
ERISA provides a limited exception to the anti-alienation provision for
QRDO's. This provision, enacted as part of the REA amendments, is intended
to protect spouses and dependents of employees who participate in ERISA
benefit plans. See Boggs, 520 U.S. at 846-48.
103 520 U.S. 833, 117 S. Ct. 1754, 138 L. Ed. 2d 45 (1997).
104 Pet. for Review at 16-17; Secretary of Labor Amicus Br. at 5-11; Boeing
Co., et al. Amicus Br. at 4-6.
105 Boggs, 520 U.S. at 841.
106 Id. at 836. (An "alternate payee" under a QDRO is considered a plan
"beneficiary." 29 U.S.C. sec. 1056(d)(3)(J)).
107 Id. at 846-51; see also, Ablamis v. Roper, 937 F.2d 1450 (9th Cir. 1991).
(California community property law providing for testamentary transfers to
third party of plan beneficiary's equitable share in ERISA pension plan
directly conflicted with anti-alienation provision).
108 See Amicus Br. of the Wash. State Trial Lawyers Ass'n at 14.
109 Amicus Br. of the Secretary of Labor at 10.
110 Boggs, 520 U.S. at 836-37.
111 Id. at 851-52 (Testamentary transfer under state law condemned as a
diversion of retirement benefits in violation of ERISA).
112 RCW 11.07.010(2)(a).
113 Boggs, 520 U.S. at 851-52.
114 Id.