Every month, the International Foundation releases the Legal and Legislative Reporter, a compilation of new employee benefits-related case summaries. Below is a summary we thought you’d be interested in. Content provided by Morgan, Lewis & Bockius LLP.

The U.S. District Court for the District of Oregon grants the defendant spouse’s motion to dismiss or put in abeyance to stay proceedings to the extent needed for the state court to determine related matters prior to benefit plan payments.

The plaintiff is the representative of the estate of a deceased employee who was a participant in his employer’s retirement plans. The defendants include the deceased participant’s employer and his spouse. The plans are governed by the Employee Retirement Income Security Act of 1974 (ERISA).

The deceased participant was fully vested or otherwise eligible to participate in the plans at the time of his death. Under the plans, the deceased participant’s spouse was his primary beneficiary, and his estate was the secondary beneficiary. The defendant spouse was indicted for second degree murder for killing her husband, the deceased participant. The estate filed a petition for declaratory judgment under the state’s Slayer Statute, seeking declaration of the deceased participant’s property, including proceeds from benefit plans. The plaintiff also submitted a claim to the defendant employer for the deceased participant’s benefits on the same grounds.

After the defendant spouse was convicted of second-degree murder, the plaintiff, Ruth Ann Munger, individually and in her capacity as personal representative of the estate, filed a complaint under ERISA in which she sought payment of the deceased participant’s benefits to his estate instead of to the defendant spouse. The defendant spouse opposes this payment, and the defendants filed counter- and cross-claims and requests for declaratory relief, noting the competing claims to the plan and requesting the court to determine the parties’ rights to the funds. Lastly, the defendant spouse filed a motion to dismiss or put in abeyance the case on the basis that her appeal of her criminal conviction is pending.

The court explains that the pendency of an action in state court is not a bar to federal actions on the same matter. Additionally, because federal courts have an obligation to exercise the jurisdiction given to them, there must be exceptional circumstances for a federal court to stay or dismiss an action because of a concurrent state proceeding. The court considers the following factors when determining whether such exceptional circumstances exist: (1) which court first assumed jurisdiction over property; (2) the inconvenience of the federal forum; (3) the desirability of avoiding piecemeal litigation; and (4) the order in which jurisdiction was obtained by the concurrent forums. No one factor is determinative, and the court must consider each of these factors when determining whether to exercise jurisdiction.

The plaintiff brought two ERISA claims, including that the estate is entitled to the receipt of benefits under the plans and that the defendant employer owed fiduciary duties to administer the plans in accordance with their terms, which the defendant employer breached by failing to pay the deceased participant’s plan balance to his estate. The Ninth Circuit, the circuit where the District of Oregon is located, has found that a stay pending resolution is impermissible where a claim falls within a federal court’s exclusive jurisdiction.

Here, the court finds that the plaintiff’s claim that the estate is entitled to the receipt of the deceased participant’s plan benefits is not within the federal court’s exclusive jurisdiction. Consequently, the court has discretion as to whether to permit a stay of the plaintiff’s claim. Similarly, the plaintiff’s claim of breach of fiduciary duties does not fall within exclusive federal jurisdiction because the facts underlying this claim are identical to those supporting the plaintiff’s first claim. Additionally, the Ninth Circuit has held that where a plaintiff brings a claim under the ERISA provision supporting the plaintiff’s first claim, they cannot also find relief under the provision relating to the second claim. Therefore, the court also has discretion as to whether to permit a stay of the plaintiff’s second claim.

The court finds that the relevant factors support a stay. First, the estate filed a petition for declaratory judgment pursuant to the state’s Slayer Statute. This means that the state court assumed jurisdiction over the plan benefits and the question of the defendant spouse’s status as a slayer before the federal court assumed jurisdiction based on the ERISA questions. Second, there is a strong desire to avoid piecemeal litigation because the decision about benefit entitlement would inherently require a determination as to whether the defendant spouse is a slayer under federal common law. This would require the court to evaluate whether the defendant spouse murdered the deceased participant, and any determinations on this issue could directly affect the state court’s probate and wrongful death proceedings.

Lastly, the state court is an adequate forum to protect the rights of the parties. The state court will address the defendant spouse’s murder conviction and status as a slayer, as well as the plaintiff’s rights to the deceased participant’s plan benefits. Consequently, the court concludes that a stay is appropriate until the completion of the defendant spouse’s criminal appeal or the state court wrongful-death proceedings are resolved.

Accordingly, the court grants the defendant spouse’s motion to dismiss or put in abeyance.

Munger v. Intel Corp., et al., No. 3:22-cv-00263-HZ (D. Or., Feb. 6, 2023).

Tim Hennessy

Editor, at the International Foundation of Employee Benefit Plans  Favorite Foundation Product: Plans & Trusts Benefits-related topics that interest him the most: retirement security and mental health Personal Insights: Tim enjoys spending time with his family, watching movies, reading, writing, and running.

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