Mitchell v. Program

255 F.Supp.3d 781

Laura MITCHELL, Plaintiff,

v.The NFL PLAYER ANNUITY PROGRAM and the NFL Player Disability & Neurocognitive Benefit Plan, Defendants.

No. 16 C 146.

United States District Court, N.D. Illinois, Eastern Division.

Signed June 5, 2017

Douglas Christopher Giese, R. Timothy Novel, Chirag Haresh Patel, Markoff Law LLC, Leslie J. Fineberg, Illinois State Attorney's Office, Chicago, IL, for Plaintiff.

Lori E. Lightfoot, Chad Matthew Clamage, Thomas Peter Evans, Mayer Brown LLP, Chicago, IL, Michael Lee Junk, Groom Law Group, Washington, DC, for Defendants.

MEMORANDUM OPINION AND ORDER

JORGE L. ALONSO, United States District Judge

Before the Court are plaintiff's amended motion for entry of judgment and defendants' motion to dismiss and for summary judgment.¹ For the reasons explained below, plaintiff's motion is denied and defendants' motion is granted to the extent that this action is dismissed.

BACKGROUND

Defendants, the NFL Player Annuity Program ("Annuity Program") and the NFL Player Disability & Neurocognitive Benefit Plan ("Disability Plan") (collectively, the "Plans"), removed this third-party citation action to this court from the Circuit Court of Cook County. This supplementary proceeding arises out of a judgment in a state-court divorce action between Laura Mitchell ("Laura") and Qasim Mitchell ("Qasim"), a former National Football League ("NFL") player and participant in the Plans. The divorce judgment provides that Laura is entitled to certain monies Qasim was "scheduled to receive" from the NFL "in 2011 or/and 2012", as well as half of Qasim's NFL pension fund and half of "various monies from" Qasim's "401(k) fund." (ECF No. 18–1, J. for Dissolution of Marriage at 5.)² The Plans are employee benefits plans subject to the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. §§ 1001 et seq.³ Before relating the complicated history of this citation action, the Court first will outline the Plans' relevant policies and procedures for alternate payees, such as ex-spouses, to establish their right to a portion of a plan participant's benefits.

Plan Provisions

The Annuity Program provides that, subject to an exception for qualified domestic relations orders ("QDROs"),⁴ no benefit under the Program "will be subject in any manner to anticipation, pledge, encumbrance, alienation, levy or assignment, nor to seizure, attachment or other legal process for the debts of any Participant or Beneficiary, unless required by law." (ECF No. 26–4, Ex. 2 to Defs.' Mem. Supp. Mot., NFL Player Annuity Program § 8.1.) The Disability Plan provides that, subject to an exception for QDROs and as allowed by 26 U.S.C. § 401(a)(13) (the Internal Revenue Code's non-alienation provision for pension and annuity benefits), no benefit under the Plan "will be subject in any manner to anticipation, pledge, encumbrance, alienation, levy or assignment, nor to seizure, attachment or other legal process for the debts of any Player, unless required by law." (ECF No. 26–5, Ex. 3 to Defs.' Mem. Supp. Mot., NFL Player Disability & Neurocognitive Benefit Plan § 13.5.) The Plans have identical procedures through which individuals who seek to become alternate payees may submit a QDRO.⁵ (ECF No. 26–6, Ex. 4 to Defs.'

Mem. Supp. Mot., Qualified Domestic Relations Order—Procedures.) Those procedures spell out the requirements for an order to be recognized as a QDRO as well as the requirements for restricting a participant's benefits pending submission of an order and approval by the relevant Board. They also state that a player's "access to plan benefits can be restricted once the Qualified Order Center receives a draft domestic relations order, court order, or joinder." (Id. at 4.)

Regarding such restriction on a participant's access to funds, the Plans' internal policies provide that benefits "will only be restricted or suspended if the Q[ualified] O[rder] office receives a draft DRO, signed DRO, Joinder, or restraining order. Benefits will not be restricted or suspended for any other reason including request for models, subpoenas for plan information, or other written communication from an attorney." (ECF No. 26–7, Ex. 5 to Defs.' Mem. Supp. Mot., Qualified Domestic Relations Order Administration Manual at 10.) As for restraining orders, the Plans restrict benefits only upon receipt of orders that "specifically restrain[ ] (i) a Board or (ii) a Plan from allowing a Player to take a loan, withdrawal, and/or distribution." (Id. at 14.)

The State–Court Proceedings

Laura and Qasim's divorce judgment was entered in March 2011. Later that year, Laura obtained a QDRO that entitled her to fifty percent of the balance in Qasim's NFL Player Second Career Savings Plan.

In 2014, Laura submitted to the Annuity Program a draft domestic relations order for child support under which she would be an alternate payee to receive a portion of Qasim's Program benefits. Eventually, on February 26, 2015, the Annuity Program preapproved the draft as a QDRO. The notice informing Laura of the preapproval stated that the proposed order would satisfy the requirements of a QDRO based on the Plan's requirements "once the court signs and certifies the order"; the "court signed" order would have to be returned to the NFL Player Benefits Office (the "Benefits Office") and be accepted as a [QDRO] before any benefits would be awarded to Laura; Qasim's "benefit activity" had been restricted upon receipt of the proposed order; and if a certified domestic relations order was not received within ninety days of the notice date, the restrictions on Qasim's benefits would be removed. (ECF No. 26–12, Ex. 10 to Defs.' Mem. Supp. Mot., Domestic Relations Order Preapproval Notice.) After the Benefits Office did not receive a certified copy of the QDRO from Laura, the Annuity Program sent her a warning notice on April 27, 2015, reminding her that if it did not receive a revised domestic relations order in thirty days, the existing restrictions on Qasim's benefits would be lifted, and Qasim would have "unrestricted access to" the Program. (ECF No. 26–13, Ex. 11 to Defs.' Mem. Supp. Mot., Domestic Relations Order Restriction Lift Warning Notice.) On May 1, 2015, a court presiding over the post-dissolution proceedings related to the divorce judgment entered a $306,220.04 judgment against Qasim based on his failure to pay child support as ordered in the divorce judgment.

Thereafter, Laura did not submit a certified domestic relations order to the Annuity Program for approval. On May 12, 2015, however, her divorce attorney, Leslie Fineberg, issued citations to discover assets that noted the $306,220.04 unsatisfied judgment against Qasim and named as respondents the NFL and the NFL Players Association (the "Players Association"), which are separate entities from the Plans. The citations included the following language: "You are PROHIBITED from making or allowing any transfer or other disposition of, or interfering with, any property not exempt from the enforcement of a judgment, a deduction order or garnishment, property belonging to the judgment debtor to which s/he may be entitled ..., and from paying over or otherwise disposing of any monies not so exempt...." (ECF No. 18–2, Citations to Discover Assets to a Third Party (boldface omitted).) They also stated that this prohibition would remain in effect until further order of court or termination of the proceeding. The citations were not served on the NFL or Players Association; rather, they were mailed to the Benefits Office, which handles the day-to-day operations of the Plans. The Benefits Office received the citations in mid-May.

On May 25, 2015, the Annuity Program sent Laura a notice stating that it had received the citation notice "to extend the restriction on the Player's NFL Player Annuity Program" and that the restriction could continue only if the Qualified Order Team received a new draft domestic relations order that was different from the previously preapproved one, a court order, or a joinder. (ECF No. 26–15, Ex. 13 to Defs.' Mem. Supp. Mot., Domestic Relations Order Information Notice (boldface omitted).) The notice further stated in bold print: "If the Qualified Order Team does not receive one of the above by May 27, 2015, the restriction on the Player's NFL Player Annuity Program will be removed." (Id. )

Laura did not submit a new draft order, court order, or joinder to the Annuity Program, so on May 27, 2015, the Program lifted the restriction on Qasim's account. On that date, in response to Qasim's application for disability benefits, the Disability Plan also issued Qasim a disability benefit payment in the amount of $50,000.00.

In a letter to Fineberg dated June 8, 2015, the Plans again stated that to restrict Qasim's benefits, they needed a draft domestic relations order, a court-certified domestic relations order, or a restraining order against a Plan, and that a judgment alone was insufficient. (ECF No. 26–20, Ex. 18 to Defs.' Mem. Supp. Mot., Domestic Relations Order Request for Information.) That letter also answered the citations' three interrogatories concerning the nature of the monies in the respondents' custody. Nevertheless, shortly thereafter, Fineberg appeared in state court and obtained an ex parte show-cause order against the NFL and the Players Association, which had not appeared in court. When the NFL and Players Association did not appear for the July 16 show-cause hearing, Fineberg sought entry of judgment against those entities.

Meanwhile, in early June, and apparently because the restriction had been lifted, Qasim had applied for a lump-sum distribution of the entirety of the funds in his non-tax-qualified Annuity Program account. On June 24, 2015, the Annuity Program processed that application and distributed to Qasim from his account a lump sum of $64,379.15. On July 15, Fineberg's law firm submitted a draft QDRO to the Annuity Program. The next day, the Qualified Order Center issued a notice...