The Fund did not move to set aside or modify the order.
On March 31, 1992, the Fund appealed to the California Court of Appeal. Alameda County Superior Court entered an order directing the Fund to pay $ 10,000 attorneys fees for Leola's expenses in defending the appeal pursuant to Cal. Civil Code §§ 4370 and 4370.5. On August 13, 1992, the Court of Appeal stayed the appeal and ordered the Fund to pay the attorneys fees by October 1, 1992. The Fund did pay those fees and the Court of Appeal issued a published decision, In re Marriage of Levingston, 93 C.D.O.S. 696 (January 28, 1993), holding that state courts do have concurrent jurisdiction to review a plan administrator's decision that a particular order is not a QDRO.
The Fund filed this action in Federal Court on July 28, 1992, seeking injunctive and declaratory relief pursuant to 29 U.S.C. § 1132 (a)(2) and (a)(3). After receiving the complaint in this case, Leola filed a motion in state court for an order directing the Fund to pay attorneys fees in this action. A hearing on that motion was held on September 14, 1992, and the Fund made no appearance. The Superior Court then entered an order requiring the Fund to pay Leola's fees in this action. The Fund contends that it never received notice of the hearing and order until October 15, 1992. The Fund has moved to set aside that order in Superior Court and the hearing on that motion has been continued until April 21, 1993 to account for the results of this motion.
This motion squarely presents the issue of whether state courts have final authority to determine whether a domestic relations order is a "qualified" domestic relations order for purposes of ERISA and to order ERISA plan administrators to distribute fund assets in compliance with the terms of a particular domestic relations order.
Plaintiffs contend that as plan administrator, they have a fiduciary duty to ensure that no payments are made which violate the terms of the Plan. This duty includes the obligation to review domestic relations orders and determine whether they require distribution of plan assets in a way not permitted under the Plan. Where they make such a determination, the domestic relations order is not "qualified" within the meaning of 29 U.S.C. § 1056(d)(3)(B)(i) and they have no obligation to comply with the order. The Plan contends that since federal courts have exclusive jurisdiction over civil suits brought by a plan fiduciary to "enjoin any act or practice which violates any provision of" ERISA, 29 U.S.C. § 1132 (a)(3), the Plan's actions in this context may be reviewed only by the federal courts. 29 U.S.C. § 1132 (e)(1).
The Plan's theory has some appeal and, in fact, was sufficient to defeat Defendants' Motion to Dismiss, denied by this Court on December 22, 1992. A problem arises, however, from an ambiguity created by the second sentence of § 1132(e)(1). The second sentence provides concurrent jurisdiction for actions under § 1132(a)(1)(B), which allows a participant or beneficiary 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. Leola's action in state court to enforce the domestic relations order properly falls within § 1132(a)(1)(B) because she fits the ERISA definition of "beneficiary. See 29 U.S.C. § 1056(d)(3)(J) ("A person who is an alternate payee under a qualified domestic relations order shall be considered for purposes of any provision in this chapter a beneficiary under the plan") and 29 U.S.C. § 1056(d)(3)(K) ("The term 'alternate payee' means any spouse, former spouse, child or other dependent of a participant who is recognized by a domestic relations order as having a right to receive all, or a portion of the benefits payable under a plan with respect to such participant"). Thus, the literal terms of the statutory scheme create the bizarre situation in which the state court has jurisdiction to hear Leola's suit to enforce the domestic relations order while federal courts have exclusive jurisdiction over the Plan's suit to block enforcement of the order. Plainly, this is not what Congress envisioned when it created these provisions.
There are several reasons to suspect that Congress intended state courts to resolve the issue of whether a particular domestic relations order is qualified. The only statutory provision that directly mentions this issue provides that:
During any period in which the issue of whether a domestic relations order is a qualified domestic relations order is being determined (by the plan administrator, by a court of competent jurisdiction, or otherwise), the plan administrator shall separately account for amounts [in dispute].
29 U.S.C. § 1056(d)(3)(H)(i) (emphasis added). While this section is hardly dispositive, it seems that if Congress wished to limit jurisdiction to federal courts it would not have used the general term, "court of competent jurisdiction." United States v. Handy, 761 F.2d 1279, 1280 (9th Cir. 1985) ("A statute should be construed so as to avoid making any word superfluous"). Moreover, the provision that creates concurrent jurisdiction, § 1132(e)(1), refers to "State courts of competent jurisdiction and district courts of the United States," thus indicating, albeit obliquely, that the general term "court of competent jurisdiction" refers to state or federal courts as specified in the second sentence of § 1132(e)(1).
The Fund does present an interesting piece of legislative history which suggests a contrary interpretation, however. In Menhorn v. Firestone Tire & Rubber Co., 738 F.2d 1496, 1498 (9th Cir. 1984), the Ninth Circuit dealt with an unrelated aspect of federal ERISA jurisdiction,
but cited a Conference Committee Report interpreting federal and state jurisdiction under the original ERISA statute:
Under the conference agreement, civil actions may be brought by a participant or beneficiary to recover benefits due under the plan, to clarify rights to receive future benefits under the plan, and for relief from breach of fiduciary responsibility. The U.S. district courts are to have exclusive jurisdiction with respect to actions involving breach of fiduciary responsibility as well as exclusive jurisdiction over other actions to enforce or clarify benefit rights provided under title I [the remedial provisions described below, now codified at 29 U.S.C. §§ 1021-1114]. However, with respect to suits to enforce benefit rights under the plan or to recover benefits under the plan which do not involve application of title I provisions, they may be brought not only in U.S. district courts but also in State courts of competent jurisdiction. All such actions in Federal or State courts are to be regarded as arising under the laws of the United States in similar fashion to those brought under section 301 of the Labor-Management Relations Action of 1947.