Opinion
Case No: 04-CV-1876 W (NLS).
January 6, 2006
ORDER GRANTING IN PART AND DENYING IN PART DEFENDANTS' MOTION FOR SUMMARY JUDGMENT
Defendants Mutual of Omaha Insurance Company and Mutual of Omaha 401(k) Long-Term Savings Plan (collectively "Mutual" or "Defendants") seek summary judgment in this ERISA-governed pension benefits case. Plaintiff Diane Geiler ("Plaintiff") opposes. All parties are represented by counsel. The Court decides the matter on the papers submitted and without oral argument. See CIV. L.R. 7.1. For the reasons outlined below, the Court denies GRANTS IN PART and DENIES IN PART Defendants' motion.
"ERISA" refers to the Employee Retirement Security Act of 1974, 29 U.S.C. § 1001 et seq.
I. BACKGROUND
This case involves Plaintiff Diane Geiler's claim for benefits under an ERISA-governed pension plan, specifically the Mutual of Omaha 401 (k) Long Term Savings Plan ("Plan"). Diane's former husband, Robert Geiler ("Robert") was a participant in that plan. The Plan was administered by Defendant Mutual of Omaha Insurance Company. Plaintiff's complaint asserts two causes of action ("COA"): (1) denial of ERISA benefits and (2) failure to provide ERISA notices. Both relate to the 401 (k) plan and its administration.
The parties agree that the 401 (k) savings plan at issue in this case is an employee welfare plan goverened by ERISA. See Plaintiff's First Amended Complaint ("FAC"), ¶ 1-3.
Robert is also a third-party defendant.
A. FACTUAL BACKGROUND
Robert was a Mutual employee and a participant in the Mutual-administered 401(k) savings plan. (Declaration of Lisa A. Stephan ("Stephan Decl.") ¶ 2). On January 31, 2001 Robert sent Mutual an "Order After Ex Parte Hearing" ("Order") entered on January 12, 2001 by the San Diego County Superior Court in Case No. D461351 captioned "In re Marriage of Petitioner: Diane Geiler and Respondent: Robert Geiler". Id., Ex. 1. The Order stated in pertinent part:
The Court orders the community to liquidate the communities' interest in Respondent's Retirement plan unless parties can obtain funds [sic] another source by 1/19/01 to pay on-going litigation expenses, including but not limited to attorney's fees, fees for a psychological evaluation being conducted by Steven Sparta, PhD., Special Master Robert Wesley and any other expenses reasonably incurred by the parties in litigating the matter.Id. The Order contained an interlineation which substituted the phrase "Respondents Retirement Plan" for "Respondent's 401 (k)". The Order also shows that, amongst other disbursements, Plaintiff's attorney Maura Byrne was to receive $7,500 of the funds addressed by the Order. Id.
On January 31, 2001 Mutual informed Robert that the Ex Parte Order was unclear as to whether it applied to the Mutual 401 (k) savings plan or another 401 (k) or retirement plan that Robert may have had. (Stephan Decl., Ex. 3.) Mutual explained that the Plan could only respond to a Qualified Domestic Relations Order ("QDRO") issued by a court, and provided Robert with a specimen domestic relations order as a guideline. Id., Ex. 5. Mutual also provided a copy of its internal procedures regarding its 401 (k) savings plan and domestic relations orders. Id., Ex. 4. Those procedures stated that "[u]pon receipt of a draft or final divorce decree or other domestic relations order which refers to Plan benefits . . ." Mutual would stop withdrawals and benefits from Mutual's 401 (k) savings account. Id.
Mutual did not receive any response from Robert about the matter. On April 12, 2001, Robert again contacted Mutual to inquire about his 401 (k) account, and Mutual again sent Robert a copy of the January 31 letter, a copy of their internal procedures, and a sample QDRO. Neither Plaintiff nor her husband provided Mutual with written notice that they had stopped attempting to correct the original January 12, 2001 Order. See Decl. of Charles S. Spears, Ex. 2 at 7.
Mutual terminated Robert's employment Robert's employment on August 21, 2001 for reasons irrelevant to this Case. Stephan Decl. ¶ 7. On August 31, 2001 Robert requested in writing that Mutual liquidate his 401 (k) account. Stephan Decl. ¶ 8, Ex. 7. Mutual then distributed the balance of his 401 (k) savings plan to Robert. Stephan Decl. ¶ 10. That distribution was processed on September 17, 2001. Id.
On September 24, 2001 — one week after Robert had liquidated his 401 (k) account — Mutual received an order from the state court captioned as a Qualified Domestic Relations Order. Stephan Decl. ¶ 11, Ex. 8. The QDRO was entered by that court on January 12, 2001 and ordered a distribution of half of Robert's 401 (k) account to Diane. Id. B. THE MOTION FOR SUMMARY JUDGMENT
Plaintiff brings two causes of action. The first is for denial of ERISA benefits. 29 U.S.C. 1132(a)(3). Plaintiff claims that Mutual improperly allowed Robert to withdraw funds from his pension plan. According to Plaintiff, Mutual was required to temporarily freeze those funds when it received the state court's Order, ordering that Robert's retirement plan be liquidated to pay attorneys' fees and other expenses of their divorce proceeding. Plaintiff argues that this obligation arose because the Ex Parte Order was a "Domestic Relations Order" ("DRO") as that term is defined under ERISA.
Plaintiff's second cause of action is for failure to provide ERISA notices. Plaintiff claims that Defendant failed to notify her of her husband's termination from employment. Plaintiff contends that this action violated 29 U.S.C. 1132(c) because it was a qualifying event under 29 U.S.C. 1163(2), for which notice was required pursuant to 29 U.S.C. 1166(a)(4).
Mutual moves for summary judgment on both COAs. Mutual argues that the first COA should be dismissed because the Order failed to meet ERISA's statutory definition of a Domestic Relations Order ("DRO"). (Alternatively, Mutual argues that even if the Order was a DRO Mutual should be excused because it did not abuse its discretion in making this determination.) Mutual next argues that the second COA fails as a matter of law because the statutory basis for that claim does not apply here. According to Mutual, that statute applies only to health benefits, while the case at hand involves Plaintiff's alleged right to pension plan benefits.
As discussed more fully below, the Court concludes that the Ex Parte Order was a DRO as a matter of law and that Mutual is not immunized under the abuse of discretion doctrine. However, the Court finds that Plaintiff's statutory basis for the second cause of action simply is not viable under the facts of this case. Accordingly, the Court denies summary judgment on the first COA and grants summary judgment on the second.
II. LEGAL STANDARD
Summary judgment is appropriate under Rule 56(c) where the moving party demonstrates the absence of a genuine issue of material fact and entitlement to judgment as a matter of law. See Fed.R.Civ.P. 56(c); Celotex Corp v. Catrett, 477 U.S. 317, 322 (1986). A fact is material when, under the governing substantive law, it could affect the outcome of the case.Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). Under Rule 56(d), the court may grant summary judgment on less than the non-moving party' whole claim. Zapata Hermanos Sucesores, S.A. v. Hearthside Baking Co., Inc., 313 F.3d 385, 391 (7th Cir. 2002) (Posner, J.).
A district court's interpretation of ERISA is a question of law. Stewart v. Thorpe Holding Co. Profit Sharing Plan, 207 F.3d 1143 (9th Cir. 2000) (citing Wetzel v. Lou Ehlers Cadillac Group Long Term Disability Ins. Program, 189 F.3d 1160, 1163 (9th Cir. 1999)).
III. DISCUSSION
Neither party materially disputes the facts in this case. Instead, their dispute concerns a purely legal question: whether the January 12, 2001 Superior Court order was a "Domestic Relations Order" as that term is defined under ERISA. This distinction is significant because, under the provisions of the Plan, when Mutual receives a DRO it must place a temporary freeze on the participant's funds — a freeze that would have prevented Robert from withdrawing his funds. Both sides appear to acknowledge that this issue is both critical and dispositive. A finding that the January 31 order was not a DRO essentially eviscerates Plaintiff's claim because it means that Mutual was not obligated to freeze Robert's funds. In contrast, a finding that the January 31 order was a DRO means that Mutual would have been obliged to temporarily freeze Robert's funds until it either (1) received a QDRO or (2) was notified in writing that a QDRO was no longer being sought.
A district court's interpretation of ERISA is a question of law. Stewart v. Thorpe Holding Co. Profit Sharing Plan, 207 F.3d 1143 (9th Cir. 2000) (citing Wetzel v. Lou Ehlers Cadillac Group Long Term Disability Ins. Program, 189 F.3d 1160, 1163 (9th Cir. 1999)).
A. ERISA'S BACKGROUND AND THE ANTI-ALIENATION PROVISION
In enacting ERISA, Congress intended to "expansively establish pension plan regulation as an exclusive federal concern." Alessi v. Raybestos-Manhattan, Inc., 451, U.S. 504, 522-25 (1981). ERISA thus contains a broad preemption clause, 29 U.S.C. 1144(b), and preempts state laws which either directly or indirectly relate to an employee benefit plan. See Pilot Life Ins. CO. v. Dedeaux, 481 U.S. 41, 47 (1987).
Before ERISA's enactment, many individuals who had worked their entire lives expecting to receive income during retirement found themselves deprived of a pension due to the absence of minimum standards protecting pension plan funds. Congress thus enacted ERISA to provide such protection to "employees and their dependents." H.R. Conf. Rep. No. 93-1280, at 7 (1974).
ERISA contains what is commonly referred to as an "anti-alienation" provision. This clause requires a pension plan to ensure that "benefits provided under the plan may not be assigned or alienated." 29 U.S.C. 1056(d)(1). Before the statute was amended in 1984, it failed to clearly delineate a spouse's interest in an employee's pension benefits. Thus "many women who worked in the home and contributed to the family's financial security [were left] without the ability to obtain any pension benefits upon their husbands' death or upon divorce." Ablamis v. Roper, 937 F.2d 1450, 1453 (9th Cir. 1991). Congress thus passed the Retirement Equity Act of 1984, Pub. Law 98-937, to afford better protection to these individuals. The REA amended ERISA in an effort primarily to safeguard the financial security of widows and divorcees. Id.
The REA amended ERISA to allow alienation in certain limited circumstances — including when a plan receives a "qualified domestic relations order" ("QDRO"). See generally 29 U.S.C. § 1056(d)(3). A QDRO is a type of order, entered pursuant to state law, which relates to the provision of child support, alimony payments, or marital property rights to a spouse, former spouse, child, or other dependent of a participant, and meets certain additional requirements. ERISA's anti-alienation clause preempts any contrary directions in a court order unless that order is a QDRO. In other words, benefits under an ERISA-governed pension plan may not be paid out or withheld pursuant to an order contrary to the terms of that plan, unless the order qualifies as a QDRO.
B. WHAT CONSTITUTES A DRO AND A QDRO
At bottom, a QDRO is simply a DRO that meets certain additional requirements; it is a subset of a DRO.
It is undisputed that the Ex Parte Order was not a QDRO.
ERISA defines a domestic relations order (DRO) as:
(i) . . . any judgment, decree or order (including approval of a property settlement agreement) which —
(I) relates to the provision of child support, alimony payments, or marital property rights to a spouse, former spouse, child, or other dependent of a participant, and
(II) is made pursuant to a State domestic relations law (including a community property law)
A QDRO is defined as:
(i) a domestic relations order —
(I) which creates or recognizes the existence of an alternate payees right to, or assigns to an alternate payee the right to, receive all or a portion of the benefits payable with respect to a participant under a plan, and
(II) with respect to which the requirements of subparagraphs (C) and (D) are met.
Id.
Paragraphs C and D include a number of additional requirements that a DRO must meet to be considered a QDRO, including that the QDRO clearly specify (1) the name and last known mailing addresses of the participant and each alternate payee covered by the order, (2) the amount or percentage to be paid or a method for determining this percentage, (3) each plan to which the order applies. See 29 U.S.C. § 1056(b).
C. ERISA-GOVERNED PROCEDURES AND MUTUAL'S INTERNAL PROCEDURES WHEN A DRO IS RECIEVED
Under ERISA's provisions, when Defendants received a DRO they are required to (1) promptly notify the participant and each alternate payee of receipt and provide the plan's procedures for determining the qualified status of DROs, (2) notify the participant and each alternate payee of such determination, and (3) establish reasonable procedures, in writing, to determine the qualified status of DROs and to administer distributions under such QDROs. (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.)See generally § 1056(G)(II).
Here, Mutual's written procedures state:
Upon receipt of a draft or final divorce decree or other domestic relations order which refers to a Participant's Plan benefits, the Human Resource Services Department will stop withdrawals and benefit payments from the Participant's account while the order's qualified status is being determined (whether by the Human Resource Services Department, the Plan Committee, a court or otherwise) until the qualified status of the final order is determined.
If it is initially determined that a submitted order is not qualified, it will be assumed that the parties are attempting to correct the defective order until the Human Resource Services Department receives written notice to the contrary[.] . . . Except as provided in the preceding paragraph of this No. 4, withdrawals and benefit payments will continue to be suspended until such notice and accompanying documentation are received.
Paragraph 4 is irrelevant to this case; it permits withdrawals to resume if the QDRO determination period takes more than 18 months.
Essentially, the submission of a DRO triggers Defendant's internal obligations and places the order in a sort of "limbo" state — not yet a QDRO, but also not yet rejected out of hand during the period that Mutual assumes the parties are trying to correct the DRO's deficiencies. Thus under Mutual's provisions, the receipt of a non-qualified DRO freezes withdrawals until the parties either (1) obtain a valid QDRO, or (2) notify Mutual in writing that they have abandoned their attempt to correct the defective order.
D. PLAINTIFF'S FIRST CAUSE OF ACTION I. MUTUAL'S DRO ARGUMENT FAILS BECAUSE THE JANUARY 12, 2001 EX PARTE ORDER WAS A DRO AS A MATTER OF LAW
Plaintiff's first cause of action is for the denial of ERISA benefits. Specifically, Plaintiff contends that Mutual received a DRO and was thus obligated to follow its internal provisions and freeze Robert's funds until (1) Mutual received a valid QDRO or (2) the parties notified Mutual in writing that they were abandoning their claim. Mutual responds that it is not at fault because its "freeze" provisions are only triggered upon the receipt of a DRO, and the January 12, 2001 Order was not a DRO. Mutual argues that the Order did not specifically identify the Mutual 401 (k) account, nor make reference to payment of a sum of money to Robert's wife or for her benefit. Mutual further contends that the Order was not even capable of being followed with certainty, because it only required liquidation of the retirement plan to the extent required to pay litigation expenses that could not be paid from other funds, a fact not determinable from the Order itself.
The Court respectfully disagrees.
There is little federal case law interpreting the definition of a DRO. This is likely because, as one court has put it, "[a] DRO has a generally understood meaning. A QDRO is more a term of art within ERISA."Singleton v. Singleton, 290 F.Supp.2d 767, 768 fn. 2 (W.D. Ken. 2003). Indeed, because ERISA's anti-alienation clause makes benefits alienable only upon receipt of a QDRO, most of the action normally takes place around that term's definition.
ERISA's definition of a DRO is extremely broad. ERISA defines a DRO as " any judgment, decree, or order (including approval of a property settlement agreement which (1) relates to the provision of child support, alimony payments, or marital property rights to a spouse, former spouse, child, or other dependent of a participant, and (2) is made pursuant to a State domestic relations law (including a community property law)." (emphasis added). These are the only requirements listed; nothing more is required.
Thus any order, made pursuant to state law, that relates to the provision of marital property rights to a spouse or former spouse is a DRO.
Based on this definition, the Court concludes, as a matter of law, that the January 12, 2001 Ex Parte Order was a DRO as that term is defined under ERISA.
The statute does not define the word "relates," and thus the Court must give the term its "ordinary, contemporary, common meaning." See Perrin v. United States, 444 U.S. 37, 42 (1979). "Relates" is generally understood as encompassing a connection or association; having to do with; a relation between two concepts. Black's Law Dictionary, a more exacting source, similarly defines relate as "[t]o stand in some relation; to have bearing or concern; to pertain; refer; to bring into association with or connection with." Black's Law Dictionary, Fifth Edition (1979). The statute also fails to define the term "provides;" that term generally means to make, procure, or furnish for future use; to prepare. See Id. Thus the question becomes whether the Order provides a "connection or association" with the "furnishment" of marital property rights to a spouse or former spouse.
In California, attorney's fees and costs of litigation are a proper subject of orders in a dissolution of marriage proceeding. See California Family Code § 2030. Community property is divided at dissolution under an "equal division" process, meaning that each spouse is presumptively entitled to half of the community assets acquired during marriage. Id. at §§ 2030, 2550. California's public policy favors a parity at the outset between the spouses in their ability to obtain effective legal representation. In Re Marriage of Hatch, 169 C.A.3d 1213. Thus to protect a spouse's rights during dissolution and ensure that the spouse can obtain representation, a California court may order one spouse to pay the other's attorney fees. Fam. Code § 272(a). (These fees may be awarded from any type of property, either community or separate.Id at § 2032(c)). While procedurally these fees are paid to an attorney, they are nevertheless considered to be for the benefit of the receiving spouse. (Indeed, attorney's fees were originally paid to the spouse directly because the attorney was not considered to be a party, though this rule was changed by statute in 1937.) The attorney has no interest in the subject matter.See Witkin, 11 Summary of California Law, Husband § 188 (9th Ed.); Witkin, 11 Summary of California Law (Tenth Edition) Chapter XV, § 9 (citing Telander v. Telander 60 C.A. 2d 207 (1943)); Marshank v. Superior Court In and For Los Angeles County, 180 Cal.App.2d 602 (App. 2 Dist. 1960).
Using these definitions, it becomes clear that the Order is a DRO. It was made pursuant to state law and relates to the provision of marital property rights to a spouse or former spouse.
First, the Order plainly complied with ERISA's initial requirement of a "judgment, decree or order." It was issued by a state court, signed, and labeled an "Ex Parte Order" (emphasis supplied).
The Order was also clearly made pursuant to state law. As an initial matter, the order was issued pursuant to a "domestic relations" proceeding: a dissolution of the inherently state-governed institution of marriage and the division of the community's property upon that dissolution. The order required liquidation of the "communities'" interest in the pension plan — an explicit recognition that Plaintiff had some interest or entitlement — i.e. property right — to the funds. (Under California's community property framework, that share was presumptively half of the funds contributed to that Plan during marriage.) Finally, to the extent that Plaintiff was awarded funds to help her pay for the ongoing litigation in that litigation, such an award was provided pursuant to state law encouraging parity of legal representation. Thus both the nature of the proceedings and the explicit wording in the order itself make clear that the order was made pursuant to state domestic relations law.
Finally, the order "relates to the provision of marital property rights for the benefit of a spouse" because it directed that funds be used to acquire the legal representation that ensured Plaintiff would receives a fair share of her marital community property interest. Put another way, Robert's 401(k) plan was liquidated to pay Plaintiff's attorney's fees, helping Plaintiff protect her community property rights during the dissolution proceeding and ensuring that she would be ultimately be awarded her correct share of the community property.
To the extent that the attempted disbursements are seen as coming from Plaintiff's own share (since she presumptively shares one-half of the community interest in any funds acquired during marriage), the Order merely entitles her to her own share of marital property under California law.
Accordingly, the Ex Parte Order fulfills ERISA's statutory definition of a DRO.
The Court's conclusion is a result of ERISA's broad language. The statute requires only that there be a tangential association — a "relation" — between the order and the property. Other courts have reached the same conclusion. See e.g. Patton v. Denver Post Corp., 179 F.Supp.2d 1232 (D.Colo., 2002) ("Any state court order conveying pension plan benefits to someone other than the plan participant in divorce proceedings meets the definition of a "domestic relations order" under ERISA, 29 U.S.C. § 1056(d)(3)(B)(ii).) More specific language is required only in the case of a QDRO. This is understandable, since it is the QDRO (not the DRO) that is used to overcome ERISA's strict anti-alienation provisions. Whether the DRO meets the additional requirements of a QDRO is irrelevant. The failure to do so doesn't divest the DRO of its essential nature as a DRO but merely renders it unenforceable against the plan in its current form. Under the Plan's provisions, the DRO serves as a "precursor" to a QDRO and provides Plaintiff with an opportunity to temporarily freeze the funds so that it may correct the DRO and obtain a valid QDRO.
Mutual offers a number of cases under which it argues a court has interpreted an order's language and found it to fail as a DRO. These cases, however, are unpersuasive. For instance, Defendant relies on Singleton v. Singleton, 290 F.Supp.2d 767 (W.D. Ken. 2003), a case where a court determined that a particular document presented to a pension plan was not a DRO. However, Singleton did not evaluate particular language in a state order to determine what constitutes a DRO. Rather, the court's ruling was based simply on the fact that the alleged DRO was unsigned. Id. at 770. Singleton explained "[i]t literally should go without saying that any order, including a DRO and a QDRO is `a written direction or command delivered by a court or judge,' and must be signed by the judge." Id. at 770 (citing Black's Law Dictionary (7th ed. 1999) (emphasis in original). Thus Singleton merely ruled in that case that one of ERISA's fundamental statutory requirements — the presence of a valid "order" — was not met. Put another way, the court did not rule that any particular variety of order failed to qualify as a DRO, but rather that the state court document was never really an "order" to begin with. In this case, the parties do not dispute the Order's validity; they merely argue over whether this language creates a DRO. As Singleton does not address this issue, it does not help Mutual.
Defendant relies on one state law case in its brief,Johnson v. Johnson, 320 N.J. Super. 371, in which a state court concluded that a particular DRO did not qualify as a QDRO. There are a number of problems with Defendant's reliance on this case. First, a Federal District Court is not bound (nor even necessarily persuaded) by out-of-circuit, state court authority. Second, the state court in that case was evaluating whether a particular DRO was a QDRO — not whether there was a DRO to begin with. Here, there is no dispute over QDRO status; both parties agree that the order failed to qualify as a QDRO. Finally, to the extent that the state court interprets ERISA as suggesting that orders which "relate to provisions of attorneys' fees arising out of the dissolution of . . . marriage" do not "relate to provisions of child support, alimony or . . . marital property rights," this Court expressly disagrees. ERISA's DRO language is surprisingly broad and the Court concludes that it encompasses the state court order at issue here.
Mutual also relies on Branco v. UFCW-Northern Calif. Employers Joint Pension Plan, 729 F.3d 1154 (9th Cir. 2002). There the court concluded that the estate of a deceased former spouse was not a "spouse or former spouse" as defined under ERISA, and therefore was not entitled to benefits. Mutual thus argues that this kind of strict interpretation of ERISA means that payment to an "attorney" is likewise barred. However, there are a number of problems with Mutual's reliance on this case. First,Branco's determination turned on whether there was a valid QDRO — not on whether there was a DRO. More importantly, however, the reasoning is simply not analogous. Branco's ruling resulted from the fact that an estate's request was based on probate law, while a living wife's request is rooted in domestic relations law. Branco held that payment to a deceased spouse is not authorized under ERISA because "at that point, the QDRO does not relate to marital property rights of a spouse or former spouse" Id. at 1158 (emphasis supplied). Indeed, the court held that accepting the district court's ruling "would impermissibly require the Plan Administrators to master California's probate law." Id. at 1159. The court then examined Congress' intent in enacting ERISA. Noting that Congress enacted ERISA based on a "concern for the living," the Court held that this concern was inapplicable when dealing with benefits paid to a deceased spouse's estate. "Congress' fundamental purpose was evident throughout — to ensure that both spouses would receive sufficient funds to afford them security during their lifetimes, not to arrange for an opportunity for a predeceasing non-employee spouse to leave a part of her surviving husband's pension rights to others." Id. (citing Ablamis v. Roper, 937 F.2d 1450 (9th Cir. 1991) (emphasis supplied). Thus the court concluded that "[a]n extension of payments to Anna's estate or heirs is akin to the disapproved probate transfer at issue in Ablamis." Branco at 1160. In contrast to Branco, here the plaintiff is a living person seeking to obtain money provided under a domestic relations law, the proceeds of which will benefit her directly during her lifetime. Accordingly, Branco is inapposite.
Defendant also argues that the Order failed to provide marital property rights "to a spouse" because the Order directed payment to Plaintiff's attorney. The Court respectfully disagrees. ERISA's statutory language is broad, and requires only that a DRO "relate" to the payment to a spouse. California has simply chosen to award fees more efficiently, by letting courts award attorneys fees directly to the attorney instead of requiring spouses to needlessly secure an award that they will simply (and immediately) be forced to transfer again. The form of this award is irrelevant because under California law it is for the spouse's benefit. Accordingly, the attorneys fees award at issue here "relate to" payment to a spouse.
Mutual further argues that a broad interpretation of a DRO conflicts with the general idea that ERISA should be interpreted narrowly. Yet ERISA's statutory protection is provided by a QDRO, not a DRO. The DRO here only puts the plan on notice that there is a potential QDRO in the works, and under the Plan's provision obligates the Plan to temporarily freeze funds in anticipation of the forthcoming "corrected" QDRO. A QDRO is the document which must satisfy more stringent requirements to overcome ERISA's anti-alienation provisions. Nevertheless, "securing a DRO that creates an interest in the proceeds of a pension plan gives the bearer "the right to obtain a proper QDRO." Trustees of the Directors Guild of America-Producer Pension Benefit Plans v. Tise, 234 F.3d 415, 421 (9th Cir. 2000). "The QDRO provisions of ERISA do not suggest that [the alternate payee] has no interest in the plan until she obtains a QDRO, they merely prevent her from enforcing that interest until the QDRO is obtained." Id. (citing In re Gendreau, 122 F.3d 815, 819 (9th Cir. 1997),cert denied, 523 U.S. 1005.
Finally, to the extent that Defendant argues this case based on the heightened standards required for a QDRO, that discussion is both misguided and irrelevant. Neither party disputes the fact that strict requirements must be met for a DRO to be considered a QDRO under ERISA. Mutual quotes Boggs v. Boggs, 520 U.S. 833, 851, (1997) for the notion that "ERISA's pension plan anti-alienation provision is mandatory and contains only two explicit exceptions, see §§ 1056(d)(2), (d)(3)(A), which are not subject to judicial expansion." Defendant thereby suggests that Plaintiff is somehow seeking new ways to recover under ERISA and attempting to avoid ERISA's limited anti-alienation provisions. This is incorrect. Neither Plaintiff nor this Court is attempting to expand the available options for recovery. Indeed, Plaintiff clearly recognizes that if any disbursement is available, it is only through ERISA's defined QDRO exception. Plaintiff is not arguing that this DRO gave her the right to receive disbursement under ERISA. (Nor could she; ERISA is clear that alienation is only allowed under a valid QDRO.) Rather, Plaintiff asserts that this "precursor" merely obligated Mutual to freeze the funds and give Plaintiff the opportunity to correct the DRO into a valid QDRO. Here, given the express provisions of Mutual's plan, Mutual was quite clearly obligated to do so. "It is precisely because `obtain[ing] a QDRO [is] a process which everyone (including Congress) recognizes as time-consuming' that `Erisa . . . accommodates for periods when the status of a QDRO is at issue.'"Trustees of the Directors Guild of America-Producer Pension Benefits Plans v. Tise, 234 F.3d 415, 422 (9th Cir. 2000). "This complex, carefully articulated statutory scheme, then, plainly contemplates, and accounts in detail for, the situation in which the event that triggers the payment of benefits occurs before the plan knows whether it will be obliged to make payments to an alternate payee. As such, the statute necessarily permits an alternate payee who has obtained a state law DRO before the plan participant's retirement, death, or other benefit-triggering event to perfect the DRO into a QDRO thereafter . . ." Id. (emphasis in original). "Securing a DRO that creates an interest in the proceeds of a pension plan gives the bearer "the right to obtain a proper QDRO."" Id. at 422.
The Court concludes that the Order was a DRO as a matter of law. Defendant's first basis for summary judgment thus fails.
II. MUTUAL'S ABUSE OF DISCRETION ARGUMENT ALSO FAILS
Mutual alternatively argues that even if the order was a DRO, Defendant must prevail because it did not abuse its discretion when making this determination. See Peralta v. Hispanic Business, Inc., 419 F.3d 1064 (9th Cir. 2005) (arbitrary and capricious standard applies to review of ERISA benefit denials when the plan retains discretionary authority to determine eligibility). An ERISA administrator abuses its discretion if it (1) renders a decision without explanation; (2) construes provisions of an employment benefit plan in a way that conflicts with the plain language of the plan; or (3)relies on clearly erroneous findings of fact. Boyd v. Bert Bell/Pete Rozelle NFL Players Retirement Plan, 410 F.3d 173 (9th Cir. 2005).
Here, the plain language of the plan required Mutual to place a hold on the funds when it received the Order. Mutual made a factual finding that the Order was not a DRO. This finding was clearly erroneous, and Mutual's failure to freeze the funds represented a construction of the plan's provisions that conflicted with the plain language of the Plan. Accordingly, Mutual is not immunized under the abuse of discretion doctrine and its motion for summary judgment on this ground must be denied.
Because the Court concludes that the Order was a DRO and Mutual is not immunized under the abuse of discretion standard, the Court DENIES Defendants' motion for summary judgment on Plaintiff's FIRST CAUSE OF ACTION. C. PLAINTIFF'S SECOND CAUSE OF ACTION
Plaintiff's second cause of action asserts that Mutual failed to notify Plaintiff of Robert's termination from employment as required under 29 U.S.C. §§ 1163(2) and 1166(a)(4). However, this statute applies only to "Group Health Plans." The undisputed facts demonstrated that the 401(k) plan at issue in this case is a pension plan, not a group health plan. Because the statutory basis for Plaintiff's claim does not apply based on the facts of this case, Plaintiff's claim fails as a matter of law.
All of the allegations in Plaintiff's FAC concerning the "Plan" refer to a 401(k) plan. (See FAC, ¶ 2 (Diane "[i]s a beneficiary of the Mutual of Omaha 401(k) Long-Term Savings Plan"; ¶ 3 ("Defendant MUTUAL OF OMAHA 401(k) LONG TERM SAVINGS PLAN, hereinafter the "Plan")). Plaintiff has not asserted any allegations against Mutual concerning a health plan. Yet the statutes upon which Plaintiff has relied for her second cause of action — 29 U.S.C. §§ 1163(2) and 1164(a)(4) — provide for continuation of health benefits. See 29 U.S.C. §§ 1161- 1168, commonly known as COBRA ("Consolidated Omnibus Budget Reconciliation Act of 1986). The specific statute upon which Diane has relied for her second cause of action ( 29 U.S.C. § 1166), on its face, only applies to a "Group Health Plan," defined, in pertinent part, at 29 U.S.C. § 1167(1) as "[a]n employee welfare benefit plan providing medical care . . . to participants or beneficiaries directly through insurance, reimbursement or otherwise . . ." (emphasis supplied). The statute has nothing to do with group pension plans — such as the 401(k) Plan at issue in this case. Plaintiff does not contest (nor even address) this argument in her opposition, apparently conceding that this second claim should be eliminated as a matter of law.
The Court thus finds that Plaintiff's second cause of action is not viable based on the facts of this case. Accordingly, Mutual is entitled to summary judgment as a matter of law.
The Court therefore GRANTS Mutual's motion for summary judgment as to Plaintiff's SECOND CAUSE OF ACTION. IV. CONCLUSION
For the reasons explained above, the Court: GRANTS IN PART AND DENIES IN PART Defendants' motion for summary judgment. The Court DENIES summary judgment as to Plaintiff's FIRST CAUSE OF ACTION, and GRANTS summary judgment as to Plaintiff's SECOND CAUSE OF ACTION.
IT IS SO ORDERED.