Restraining Orders on Pension Benefits before DRO

[Guest jac]

I'd like to hear your thoughts on restraining orders. Facts are as follows:

Plan is sent copies of restraining order restraining the Plan from paying the participant pension benefits and restraining the participant from "accessing" his pension benefits. No QDRO, and divorce decree states that participant gets pension benefits--nothing assigned to the ex-wife. Participant applies for benefits, and plan responds saying that there is a restraining order restraining the plan from paying benefits. Participant doesn't respond (perhaps because he reads his restraining order which states he can't "access" his benefits).

Do you think the participant could make a reasonable claim that ERISA preempts the state court restraining order (or the underlying law)?

Apparently the ex-wife may be attempting to secure a QDRO.

[mbozek]

If the divorce decree provides no benefits to spouse how can a QDRO be issued? ERISA 514(a)(7) exempts QDROs (not DROs) from the general premption of state laws relating to the plan. I think your client needs to retain counsel to see if an order has been issued or whether this is a copy of an proposed order prepared by counsel for the spouse which has been sent to the plan. What does counsel for the employee have to say about this- its his client who is affected?

[david rigby]

Perhaps the court (or maybe the ex-spouse's attorney) is aware of pre-emption, which is why a court order also restraining the participant from applying for benefits. Possible?

Whether or not the order to the plan is valid, if the participant does not apply for benefits, the plan does nothing. ??

[QDROphile]

If the restraining order is a domestic relations order it may have the effect of restricting distributions because of section 414(p)(7) while the plan administrator takes a reasonable time to determine its qualification. Depends on how the plan administrator wants to plan the game, and that will be determined by anticipated progress in obtaining a "real" domestic relations order. This is a touchy situation that needs competent legal counsel. You don't want to be in front of a state court judge to explain why the court's orders are not being respected.

[mbozek]

Q: In for the court to issue a restraining order against a PA the ct must make the Plan a party to the divorce action which would require that the ct have jurisdicton. (Its called due process). The restraining order will have to state the basis for jurisdicton over a Plan which is not available in most states (Cal joinder being the exception and it is prempted under ERISA). If there is no division of benefits under the divorce decress then there is no basis for any jurisdicton over the Plan Admin.

[QDROphile]

m: So what?

I don't disagree with you about jurisdiction. I just think there are practical alternatives to confrontation. You know perfectly well that every pre-emption challenge to the California joke joinder statute has failed despite the Department of Labor support of the challenges. You also know that local courts can be very insensitive to assertions that they have no jurisdiction. If you want to lecture a judge about due process, and then go on to whatever appeals are neccessary to get the right result, you have my blessing. I would rather stay out of a contempt hearing if I can manage it within the federal law framework.

[mbozek]

Under the US Sup ct decision in Eglehoff v. Egelhoff which followed the 9th circuit decisions you refer to, Cal joinder would be preempted by ERISA. A judge cannot cant apply state law to a PA if state law does not give the court jurisdiction over the PA. Under ERISA a PA cant withhold payment of benefits to a participant if the divorce decree does not award any retirement benefits to the spouse.