State, Fed Courts Share ERISA QDRO Jurisdiction

December 24, 2009 ( Minnesota Supreme Court has ruled that both state and federal courts have legal jurisdiction to enforce qualified domestic relations orders (QDRO) giving an alternate payee a portion of a participant’s plan balance.

Justice Lorie Skjerven Gildea, writing for the court, said Congressional lawmakers could have restricted QDRO issues to the federal courts where most cases involving the Employee Retirement Income Security Act (ERISA) are decided. Instead, Gildea pointed out, ERISA uses the phrase “court of competent jurisdiction,” which she said allows for state and federal judges to share jurisdiction. “In the case of this statute, it would have been simple for Congress to make such a clear statement if Congress wanted to make federal jurisdiction exclusive,” Gildea wrote.

In ruling on Langston v. Wilson McShane Corp., the Minnesota court also held that Patricia Ann Langston had the right to sue under ERISA Section 1132(a)(1)(B), which gives participants and beneficiaries the ability to file civil suits to enforce their ERISA rights.

The plan argued in legal papers that Patricia Ann Langston could not be considered a beneficiary because the administrator had not declared her QDRO to be “qualified” under ERISA. However, Gildea asserted, alternative payees are considered parties when a QDRO dispute goes into the court so they should be considered ERISA beneficiaries able to sue under Section 1132.

Further, the plan contended, Patricia Ann Langston’s claim was really a claim for equitable relief under ERISA Section 502(a)(3) and not a claim for benefits “under the plan.”  Justices rejected the assertion, holding that any claim a former spouse might have for benefits must necessarily arise under the terms of the plan because the plan is the only potential source of pension benefits.

The Minnesota high court’s decision upheld a state appellate court’s ruling, which asserted that only federal judges can deal with ERISA QDRO matters, and threw out a trial court’s decision that both federal and state courts can intervene in cases such the Langstons’.  

The dispute involved the Twin Cities Carpenters and Joiners Pension Fund, which refused to honor a court order granting Patricia Ann Langston half of her ex-husband Gary’s pension. According to Gildea’s opinion, the plan administrator refused to qualify the Langstons’ 2005 QDRO because the benefits were already in pay status and the benefits had already vested (Gary Langston had retired in 2004 and applied for benefits in 2004.)

Gildea’s ruling is available here.