Notice of Adverse Interest

[vs1964]

Does anyone have Template Letter for a Notice of Adverse Interest to an Employees Company?

[fmsinc]

See attached.  Modify as necessary to meet the facts of your case. 

The DoL booklet attached at Q. 1-2 and Q. 1-13 says that: 

"It is also not necessary that the retirement plan be brought into state court or made a party to a domestic relations proceeding for an order issued in that proceeding to be a “domestic relations order” or a “qualified domestic relations order.” Indeed, because state law is generally preempted to the extent that it relates to retirement plans, the Department takes the position that retirement plans cannot be joined as a party in a domestic relations proceeding pursuant to state law."

But that is not true.  

A fiduciary owes an obligation to both the Participant and to the Alternate Payee as a beneficiary under 29 USC 1002(8).

29 USC 1132(c) provides for penalties imposed upon a Plan Administrator for failure to provide information to a Participant or a Beneficiary.  
 

Under 29 USC 1132(a)(1)(B) a Participant or an Alternate Payee (who is classified as a beneficiary), can sue "to recover benefits due to him under the terms of his plan, to enforce his rights under the terms of the plan, or to clarify his rights to future benefits under the terms of the plan;"

Under 29 USC 1132(e)(1) it states that: 
        "(e)Jurisdiction
        (1)Except for actions under subsection (a)(1)(B) of this section, the district courts of the United States shall have exclusive jurisdiction of civil actions under this subchapter brought by the Secretary or by a participant, beneficiary, fiduciary, or any person referred to in section 1021(f)(1) of this title. State courts of competent jurisdiction and district courts of the United States shall have concurrent jurisdiction of actions under paragraphs (1)(B) and (7) of subsection (a) of this section."  (Emphasis supplied)

    A 2008 case from the US Court of Appeals for the 1st Circuit, Geiger v. Foley Hoag LLP Retirement Plan, held as follows: 

        "Geiger [the party complaining about the QDRO] argues that state courts do not have jurisdiction to determine whether domestic relations orders are QDROs . . .Geiger cites no cases in support of his position. Instead he relies on what he calls the "unambiguous language" of ERISA, specifically, 29 U.S.C. §1132(e)(1), which provides that federal courts "have exclusive jurisdiction over civil actions under this subchapter brought by a . . . participant," with the exception that state courts have concurrent jurisdiction over actions brought to recover benefits or enforce or clarify rights under a plan. 29 U.S.C. §1132(a)(1)(B). In Geiger's view, this is the beginning and the end of the inquiry. His view, however, has been rejected by several courts. See e.g., Scales v. Gen. Motors Corp., 275 F. Supp. 2d 871, 876-77 (E.D. Mich. 2003) ("[S]tate courts have concurrent jurisdiction regarding the interpretation of QDROs . . . and are fully competent to adjudicate whether their own orders are QDROs."); In re Marriage of Oddino, 939 P.2d 1266, 1272 (Cal. 1997) (action to qualify domestic relations order is an action to "obtain or clarify benefits claimed under the terms of a plan," and thus within state courts' jurisdiction); Robson v. Elec. Contractors Ass'n Local 134, 727 N.E.2d 692, 697 (Ill. App. Ct. 1999) ("[S]tate and federal courts have concurrent subject matter jurisdiction to construe the ERISA provisions relating to a QDRO . . . ."); Eller v. Bolton, 895 A.2d 382, 393 n.6 (Md. App. 2006) ("State and federal courts have concurrent jurisdiction to review a plan's qualification of a state domestic relations order . . . .")."

        "Geiger acknowledges the one-sidedness of the caselaw, but argues that the rationale set forth by those decisions both violates ERISA's plain language and is "logically senseless." We do not agree. In our view, it is significant that Congress has expressly exempted QDROs from ERISA's general preemption of state law. 29 U.S.C. 1144(b)(7). We are further persuaded that, "separate litigation of the QDRO issue in federal court presents the potential for an expensive and time-consuming course of parallel litigation . . . in the two court systems." Oddino, 929 P.2d at 1274-75. And finally, we share the view of the Oddino court that: Congress, having given state courts the power to issue orders determining and dividing marital rights in retirement plans, would require a separate federal court proceeding to decide whether the order is a QDRO. This would cause undue hardship, expense and delay to the affected party, and impose an unnecessary workload on already overburdened federal courts."

Similar decisions came from the 9th Circuit -Mack v. Kuckenmeister, 619 F.3d 1010, 1017 (9th Cir. 2010) (finding state court may "determine whether a DRO is a QDRO"); Langston v. Wilson McShane Corp., 776 N.W.2d 684, 693 (Minn. 2009), Jones v. Am. Airlines, Inc., 57 F. Supp. 2d 1224, 1232 (D. Wyo. 1999), In re Marriage of Levingston, 12 Cal.App.4th 1303, 1304 (Cal. Ct. App. 1993), Dalton v. Dalton, 551 S.W.3d 126, 142 (Tex. 2018) ("[U]nder ERISA, the proposed order does not qualify as a QDRO.").  See also Lundstrom v. Young, Case No. 18-cv-2856-GPC-MSB, United States District Court, S.D. California (2004) that you can find at -
https://scholar.google.com/scholar_case?case=13599097813167549363&hl=en&lr=lang_en&as_sdt=6,33&as_vis=1&oi=scholaralrt&hist=bY5nDLcAAAAJ:12484640753426065479:AFWwaea-0cgdJTbhK1HjGe3RYMFg&html=&pos=0&folt=kw

And see Turner, Equitable Distribution of Property, §6:19 n.11. 

In 2006 our Court of Special Appeals in Eller v. Bolton, 168 Md. App. 96, 895 A.2d 382 (2006), at footnote 6 said:

        "State and federal courts have concurrent jurisdiction to review a plan's qualification of a state domestic relations order under ERISA and payments made pursuant to such an order. See 29 U.S.C. §1132(e) (conferring concurrent jurisdiction upon federal district and appellate courts, along with state courts of competent jurisdiction, to decide a participant's or beneficiary's right "to recover benefits due to him under the terms of his plan, to enforce his rights under the terms of the plan, or to clarify his rights to future benefits under the terms of the plan")."

    See the recent case of Schwartz v. Bogen, Civil File No. 17-3329 (MJD/TNL), United States District Court, D. Minnesota (November 28, 2017) -
https://scholar.google.com/scholar_case?case=7440152571720477172&hl=en&lr=lang_en&as_sdt=20006&as_vis=1&oi=scholaralrt: 

        "The domestic relations exception . . . divests the federal courts of jurisdiction over any action for which the subject is a divorce, allowance of alimony, or child support, including the distribution of marital property." Wallace v. Wallace, 736 F.3d 764, 766 (8th Cir. 2013) (citations omitted).

            “[A] federal suit is inextricably intertwined with a state domestic proceeding, thereby depriving the federal court of subject matter jurisdiction, where the requested federal remedy overlaps the remedy at issue in the state proceeding. This occurs where the federal suit involves a remedy which is essentially domestic— where, in addressing the same conduct involved in a state domestic proceeding, the effect of a remedy in the federal suit is to modify, nullify, or predetermine the domestic ruling of the state proceeding.

        “Id. at 767 (citation omitted).

        “Subject matter jurisdiction exists in this case based on federal question jurisdiction because this lawsuit is based on ERISA, a federal statute. This is not a diversity case; therefore, the domestic relations exception does not apply. See, e.g., United States v. Crawford, 115 F.3d 1397, 1401-02 (8th Cir. 1997) (holding that the domestic relations "exception is irrelevant to federal prosecutions under the CSRA because the district courts' jurisdiction in such cases does not rest upon diversity, but rather is based upon 18 U.S.C. § 3231 ("The district courts of the United States shall have original jurisdiction, exclusive of the courts of the States, of all offenses against the laws of the United States.")); Rosenbrahn v. Daugaard, 61 F. Supp. 3d 862, 867 (D.S.D. 2015) ("But the domestic relations exception only applies to this court's diversity jurisdiction, not its federal question jurisdiction."), aff'd, 799 F.3d 918 (8th Cir. 2015); Grazzini-Rucki v. Knutson, No. 13-CV-2477 (SRN/JSM), 2014 WL 2462855, at (D. Minn. May 29, 2014) ("The Court, however, concludes that the domestic relations exception does not apply because it is a limitation on diversity jurisdiction, and there is no diversity here.") aff'd (8th Cir. Mar. 31, 2015).”  

Notice of Adverse Claim- Interest Cover Letter 05-25-2024.pdf Notice of Adverse Claim-Interest - 05-25-24.wpd.pdf ++++QDROs Booklet from DOL.pdf

[vs1964]

8 hours ago, fmsinc said:

See attached.  Modify as necessary to meet the facts of your case. 

The DoL booklet attached at Q. 1-2 and Q. 1-13 says that: 

"It is also not necessary that the retirement plan be brought into state court or made a party to a domestic relations proceeding for an order issued in that proceeding to be a “domestic relations order” or a “qualified domestic relations order.” Indeed, because state law is generally preempted to the extent that it relates to retirement plans, the Department takes the position that retirement plans cannot be joined as a party in a domestic relations proceeding pursuant to state law."

But that is not true.  

A fiduciary owes an obligation to both the Participant and to the Alternate Payee as a beneficiary under 29 USC 1002(8).

29 USC 1132(c) provides for penalties imposed upon a Plan Administrator for failure to provide information to a Participant or a Beneficiary.  
 

Under 29 USC 1132(a)(1)(B) a Participant or an Alternate Payee (who is classified as a beneficiary), can sue "to recover benefits due to him under the terms of his plan, to enforce his rights under the terms of the plan, or to clarify his rights to future benefits under the terms of the plan;"

Under 29 USC 1132(e)(1) it states that: 
        "(e)Jurisdiction
        (1)Except for actions under subsection (a)(1)(B) of this section, the district courts of the United States shall have exclusive jurisdiction of civil actions under this subchapter brought by the Secretary or by a participant, beneficiary, fiduciary, or any person referred to in section 1021(f)(1) of this title. State courts of competent jurisdiction and district courts of the United States shall have concurrent jurisdiction of actions under paragraphs (1)(B) and (7) of subsection (a) of this section."  (Emphasis supplied)

    A 2008 case from the US Court of Appeals for the 1st Circuit, Geiger v. Foley Hoag LLP Retirement Plan, held as follows: 

        "Geiger [the party complaining about the QDRO] argues that state courts do not have jurisdiction to determine whether domestic relations orders are QDROs . . .Geiger cites no cases in support of his position. Instead he relies on what he calls the "unambiguous language" of ERISA, specifically, 29 U.S.C. §1132(e)(1), which provides that federal courts "have exclusive jurisdiction over civil actions under this subchapter brought by a . . . participant," with the exception that state courts have concurrent jurisdiction over actions brought to recover benefits or enforce or clarify rights under a plan. 29 U.S.C. §1132(a)(1)(B). In Geiger's view, this is the beginning and the end of the inquiry. His view, however, has been rejected by several courts. See e.g., Scales v. Gen. Motors Corp., 275 F. Supp. 2d 871, 876-77 (E.D. Mich. 2003) ("[S]tate courts have concurrent jurisdiction regarding the interpretation of QDROs . . . and are fully competent to adjudicate whether their own orders are QDROs."); In re Marriage of Oddino, 939 P.2d 1266, 1272 (Cal. 1997) (action to qualify domestic relations order is an action to "obtain or clarify benefits claimed under the terms of a plan," and thus within state courts' jurisdiction); Robson v. Elec. Contractors Ass'n Local 134, 727 N.E.2d 692, 697 (Ill. App. Ct. 1999) ("[S]tate and federal courts have concurrent subject matter jurisdiction to construe the ERISA provisions relating to a QDRO . . . ."); Eller v. Bolton, 895 A.2d 382, 393 n.6 (Md. App. 2006) ("State and federal courts have concurrent jurisdiction to review a plan's qualification of a state domestic relations order . . . .")."

        "Geiger acknowledges the one-sidedness of the caselaw, but argues that the rationale set forth by those decisions both violates ERISA's plain language and is "logically senseless." We do not agree. In our view, it is significant that Congress has expressly exempted QDROs from ERISA's general preemption of state law. 29 U.S.C. 1144(b)(7). We are further persuaded that, "separate litigation of the QDRO issue in federal court presents the potential for an expensive and time-consuming course of parallel litigation . . . in the two court systems." Oddino, 929 P.2d at 1274-75. And finally, we share the view of the Oddino court that: Congress, having given state courts the power to issue orders determining and dividing marital rights in retirement plans, would require a separate federal court proceeding to decide whether the order is a QDRO. This would cause undue hardship, expense and delay to the affected party, and impose an unnecessary workload on already overburdened federal courts."

Similar decisions came from the 9th Circuit -Mack v. Kuckenmeister, 619 F.3d 1010, 1017 (9th Cir. 2010) (finding state court may "determine whether a DRO is a QDRO"); Langston v. Wilson McShane Corp., 776 N.W.2d 684, 693 (Minn. 2009), Jones v. Am. Airlines, Inc., 57 F. Supp. 2d 1224, 1232 (D. Wyo. 1999), In re Marriage of Levingston, 12 Cal.App.4th 1303, 1304 (Cal. Ct. App. 1993), Dalton v. Dalton, 551 S.W.3d 126, 142 (Tex. 2018) ("[U]nder ERISA, the proposed order does not qualify as a QDRO.").  See also Lundstrom v. Young, Case No. 18-cv-2856-GPC-MSB, United States District Court, S.D. California (2004) that you can find at -
https://scholar.google.com/scholar_case?case=13599097813167549363&hl=en&lr=lang_en&as_sdt=6,33&as_vis=1&oi=scholaralrt&hist=bY5nDLcAAAAJ:12484640753426065479:AFWwaea-0cgdJTbhK1HjGe3RYMFg&html=&pos=0&folt=kw

And see Turner, Equitable Distribution of Property, §6:19 n.11. 

In 2006 our Court of Special Appeals in Eller v. Bolton, 168 Md. App. 96, 895 A.2d 382 (2006), at footnote 6 said:

        "State and federal courts have concurrent jurisdiction to review a plan's qualification of a state domestic relations order under ERISA and payments made pursuant to such an order. See 29 U.S.C. §1132(e) (conferring concurrent jurisdiction upon federal district and appellate courts, along with state courts of competent jurisdiction, to decide a participant's or beneficiary's right "to recover benefits due to him under the terms of his plan, to enforce his rights under the terms of the plan, or to clarify his rights to future benefits under the terms of the plan")."

    See the recent case of Schwartz v. Bogen, Civil File No. 17-3329 (MJD/TNL), United States District Court, D. Minnesota (November 28, 2017) -
https://scholar.google.com/scholar_case?case=7440152571720477172&hl=en&lr=lang_en&as_sdt=20006&as_vis=1&oi=scholaralrt:

        "The domestic relations exception . . . divests the federal courts of jurisdiction over any action for which the subject is a divorce, allowance of alimony, or child support, including the distribution of marital property." Wallace v. Wallace, 736 F.3d 764, 766 (8th Cir. 2013) (citations omitted).

            “[A] federal suit is inextricably intertwined with a state domestic proceeding, thereby depriving the federal court of subject matter jurisdiction, where the requested federal remedy overlaps the remedy at issue in the state proceeding. This occurs where the federal suit involves a remedy which is essentially domestic— where, in addressing the same conduct involved in a state domestic proceeding, the effect of a remedy in the federal suit is to modify, nullify, or predetermine the domestic ruling of the state proceeding.

        “Id. at 767 (citation omitted).

        “Subject matter jurisdiction exists in this case based on federal question jurisdiction because this lawsuit is based on ERISA, a federal statute. This is not a diversity case; therefore, the domestic relations exception does not apply. See, e.g., United States v. Crawford, 115 F.3d 1397, 1401-02 (8th Cir. 1997) (holding that the domestic relations "exception is irrelevant to federal prosecutions under the CSRA because the district courts' jurisdiction in such cases does not rest upon diversity, but rather is based upon 18 U.S.C. § 3231 ("The district courts of the United States shall have original jurisdiction, exclusive of the courts of the States, of all offenses against the laws of the United States.")); Rosenbrahn v. Daugaard, 61 F. Supp. 3d 862, 867 (D.S.D. 2015) ("But the domestic relations exception only applies to this court's diversity jurisdiction, not its federal question jurisdiction."), aff'd, 799 F.3d 918 (8th Cir. 2015); Grazzini-Rucki v. Knutson, No. 13-CV-2477 (SRN/JSM), 2014 WL 2462855, at (D. Minn. May 29, 2014) ("The Court, however, concludes that the domestic relations exception does not apply because it is a limitation on diversity jurisdiction, and there is no diversity here.") aff'd (8th Cir. Mar. 31, 2015).”  

Notice of Adverse Claim- Interest Cover Letter 05-25-2024.pdf 16.57 kB · 1 download Notice of Adverse Claim-Interest - 05-25-24.wpd.pdf 13.48 kB · 0 downloads ++++QDROs Booklet from DOL.pdf 1.15 MB · 0 downloads

Thank you so much!