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DuPont Savings Plan Prevails in Supreme Court ERISA Case

1/29/2009

WASHINGTON, DC, January 29, 2009 — The Supreme Court of the United States this week issued a unanimous decision in favor of the DuPont Savings and Investment Plan in Kennedy v. Plan Administrator for DuPont Savings & Investment Plan, No. 07-636 (Jan. 26, 2009). Covington & Burling LLP, together with Kilpatrick Stockton LLP, represented the DuPont plan in the matter.

The Court held that DuPont’s plan administrator “did its statutory ERISA duty” when it paid deceased worker William Kennedy’s retirement benefits to his ex-wife Liv, whom he had named as his beneficiary. The Kennedys’ divorce decree stated that Liv gave up any interest in the account, but William did not change his beneficiary designation before his death.

In ruling for DuPont, the Court rejected a claim by William’s estate that it was entitled to the account because Liv had waived her benefits in the divorce decree. Instead, the Court agreed with DuPont that ERISA required the plan administrator to follow the terms of the plan and pay Liv as the named beneficiary. The Court recognized that a less certain rule would force plan administrators to examine external documents and “be drawn into litigation like this over the meaning and enforceability of purported waivers.”

The decision is an important victory for benefit plan administrators. Plan administrators may now rely on the beneficiary designations that follow the plan’s terms, and no longer face the uncertain and costly task of determining whether an outside document like a divorce decree modifies the beneficiary designation. The Court’s ruling is far-reaching, applying not only to employee retirement plans, but also to life insurance and other benefit plans.

The Covington appellate team was led by senior counsel John Vine, with assistance from associates Seth Safra and Jack Metzler. All are based in the firm’s Washington office. The Kilpatrick team was headed by Mark Levy, who argued the case, along with Mark Wincek, Adam Charnes, Allen Garrett, Matt Olson, and Sean Green.

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