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Ditto v. McCurdy5/12/1999
No assignment or alienation. (1) General rule. Under section 401(a)(13), a trust will not be qualified unless the plan of which the trust is a part provides that benefits provided under the plan may not be anticipated, assigned (either at law or in equity), alienated or subject to attachment, garnishment, levy, execution or other legal or equitable process. 26 C.F.R. s 1.401(a)-13 (1979). "As Judge Garth pointed out in Baker v. Otis Elevator Co., 609 F.2d 686, 690 (3d Cir. 1979), Congress specifically delegated to the Secretary of the Treasury the authority to issue regulations concerning participation, vesting and funding standards. Moreover, Congress provided that regulations issued by the Treasury Department would apply to analogous employee benefit sections of Title I of the Act in the same areas. Since the regulation in question is a legislative rather than an interpretive regulation, it is required to be followed unless it was issued in excess of the statutory authority of the Secretary or was "arbitrary, capricious, or an abuse of discretion, or otherwise not in accordance with law." Id. at 691, quoting Batterson v. Francis, 432 U.S. 416, 426, 97 S.Ct. 2399, 2406, 53 L.Ed.2d 448 (1977). The regulation in question clearly passes this test." General Motors, 623 F.2d at 462-63 (some brackets in original) (emphases added).
"Giving the required effect to Reg. § 1.401(a)-13," the Sixth Circuit concluded that "pension plan benefits are not subject to garnishment and that the district court properly enjoined the proceedings in the Michigan court." See id.
In Guidry, the United States Supreme Court recognized that ERISA "erects a general bar to the garnishment of pension benefits from plans covered by the Act." Guidry, 493 U.S. at 371. Therein, petitioner Curtis Guidry, a union official, pleaded guilty to embezzling more than $377,000 from respondent Sheet Metal Workers International Association, Local 9 (Union), in violation of section 501(c) of the Labor-Management Reporting and Disclosure Act of 1959 (LMRDA), 73 Stat. 536, 29 U.S.C. § 501(c) (1982 ed.). Guidry's employment with the Union had made him eligible to receive benefits from three union pension funds. Nevertheless, two of the pension plans determined that Guidry had forfeited his right to benefits as a result of his criminal activity. Guidry filed a complaint against the two plans in the United States District Court for the District of Colorado, alleging that the plans had wrongfully refused to pay him the benefits to which he was entitled.
The Union intervened, joined the third pension plan as a party, and stipulated to a $275,000 judgment in the Union's favor. The district court rejected the plans' claim that Guidry had forfeited his right to benefits, relying upon section 203(a) of ERISA, 29 U.S.C. § 1053(a) (1982 ed.), which declares that " ach pension plan shall provide that an employee's right to "his normal retirement benefit is nonforfeitable" so long as the employee meets the statutory age and years of service requirements. The district court concluded, however, that ERISA's anti-alienation clause did not preclude the imposition of a constructive trust in favor of the Union until the judgment was satisfied. Although the court appeared to acknowledge that the anti-alienation provision generally prohibited the garnishment of pension benefits as a means of collecting a judgment, it nevertheless stated that "ERISA must be read in pari materia with other important federal labor legislation." Guidry, 493 U.S. at 370 (quoting Guidry v. National Sheet Metal Workers' Nat'l Pension Fund, 641 F. Supp. 360, 362 (D. Colo. 1986)). Reading ERISA in pari materia with, inter alia, the LMRDA -- which seeks to combat corruption on the
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