In the case of Hisquierdo v. Hisquierdo, the U.S. Supreme Court ruled that federal law preempts state community property laws when it comes to distributing railroad retirement benefits upon divorce. The court held that a spouse's interest in their partner's Railroad Retirement Act (RRA) benefits is not subject to division as community property during divorce proceedings under California law because Congress intended these benefits to be separate and distinct from other forms of communal assets or income. This decision was based on an interpretation of the RRA which provides financial support for retired railroad workers and their families, similar to Social Security but with its own unique rules and regulations. Therefore, even though California generally treats all earnings acquired during marriage as joint property, this does not apply to RRA benefits due to federal preemption.

In the dissenting opinion for Hisquierdo v. Hisquierdo, Justice Harry Blackmun disagreed with the majority's decision to prevent a non-employee spouse from receiving any portion of their partner's federal railroad retirement benefits in a divorce settlement. He argued that this ruling contradicted California community property laws and unfairly disadvantaged non-working spouses who had contributed to their marriages in other ways. Furthermore, he believed that Congress did not intend for these benefits to be completely immune from division upon divorce when it passed the Railroad Retirement Act of 1974. Instead, he suggested that they should be treated like other marital assets and divided equitably between both parties during a divorce proceeding.