Schwartz v. Bogen, 913 F.3d 777 (8th Cir. 2019)
(a) Facts: Husband and wife were divorced in New Jersey in 1983. The divorce decree incorporated a settlement agreement. The agreement provided that if the wife remarried between 1986 and 1990, the husband would pay her, “as equitable distribution, a yearly sum equal to Twenty (20%) percent of [the husband’s]’s Basic Bell System Management Pension Plan.” 913 F.3d at 779. Since the divorce was in 1983, and the QDRO provisions were not added until 1984, no QDRO was ever obtained.
The wife remarried in 1989. The husband made voluntary payments to the wife until 2016. He then tried to argue that the payments were alimony that stopped upon the wife’s remarriage. When the wife rejected this argument, he then argued that the assignment of retirement benefits in the original decree violated ERISA.
A New Jersey state court found that the husband’s claim was barred by laches. It further found that the payments were equitable distribution and alimony and that ERISA was not intended to prevent assignments to a spouse in need of support. The husband did not appeal the New Jersey ruling.
Instead, the husband filed a federal court action in Minnesota, arguing that the New Jersey pension division order was void. The District Court dismissed the action, finding that the New Jersey ruling was res judicata. The husband appealed to the Eighth Circuit.
(b) Issue: Was the New Jersey pension division order void?
(c) Answer to Issue: No.
(d) Summary of Rationale: The husband claimed that New Jersey had no jurisdiction to rule on issues involving ERISA. But he admitted that he did not raise this argument in New Jersey, and he admitted that he had fully participated in the New Jersey proceedings. While he did not argue lack of jurisdiction specifically, he did argue that ERISA preempted New Jersey state law, and the New Jersey court held otherwise. Its holding was binding under basic principles of res judicata.
Observation: It is quite difficult to question pension division orders in federal court after the exact same arguments have been made unsuccessfully in state court. As a practical matter, the decision to seek a state or federal remedy must be made when the case is filed. The remedy for a defeat in state court is an appeal to a higher state court, not a federal action.