2005 D e c i sion s O p inion s of the U nit e d S t a t e s C our t of Appe al s for the Thir d C ir c uit

4-14-2005 

# M a r t or a n a v

. B d T r u s t ees 420

P r e c e de n t i al or N on-P r e c e de n t i al : P r e c e de n t i al D ocke t N o . 04-1181

F o l lo w thi s a nd a dd it ion al w ork s a t : h tt p://d i g it alc ommon s .l a w . v i l l a no va . e du/thir dc ir c uit_2005

Thi s de c i sion i s br ou gh t t o you for f r e e a nd ope n a c c e s s b y the O p inion s of the U nit e d S t a t e s C our t of Appe al s for the Thir d C ir c uit a t V i l l a no va U niv e r sit y S choo l of L a

w Di g it al Re posit or y

. It h as be e n a c c e pt e d for inclusion in 2005 D e c i sion s b y a n author i z e d a dmini s tr a t or of V i l l a no va U niv e r sit y S choo l of L a

w Di g it al Re posit or y

. F or mor e infor m a t ion, p le as e c on t a ct Be n j a min
. C a rl s on@l a

w . v i l l a no va . e du

. Re c omme nde d C it a t ion

" M a r t or a n a v

. Bd T r us t e e s 420" (2005). 2005 D e cisio n s . P ape r 1277. h tt p://d i g it alc ommon s .l a

w . v i l l a no va . e du/thir dc ir c uit_2005/12771 PRECEDEN TI AL
UN I TED STATES CO UR T OF A PP EALS F O R T H E T H IR D C IR C U IT

N o. 04- 1181

M I CH AE L M AR T OR ANA, A ppel l ant

v. THE BOARD OF T RUS TE ES OF S TE AM F I TT ERS

L OC AL UNI ON 4 2 0 HE AL T H, WEL F AR E AND P E NS I ON F UND; ST E A M FI T T E R S L O C A L U N I O N 420

A p p ea l from the U n it ed S tat es D ist ri ct C o u rt f o r th e E a ste rn D istric t o f P e n n sy lv a n ia ( D

. C

. C i vi l N o. 03- cv- 01029) D istric t Ju d g e : H o n o ra b le S tew a rt D a lze ll

A r gued J anuar y 25, 2005
Be f o r e : S CI RI CA, Ch i e f

J u d g e , RENDEL L a n d F I S HER, C i rcui t Judg es. ( Fi l ed: A pr i l 14, 2005)2 Jo h n N . S a lla J o s e p h M

. Ar ms t r o n g [ AR GUE D] Sal l a & A r m s t r ong 2001 M ar ket St r eet , Sui t e 3410 T w o C o m m erc e S q u are Phi l adel phi a, PA 19103 C ouns el f or Appel l ant
M a r g a r e t M

. Un d e r wo o d [ AR GUE D] J acobyD onner 1515 M ar ket St r eet , Sui t e 2000 Phi l adel phi a, PA 19102 C ouns el f or Appel l ee

OPI NI ON O F THE COURT

R E N D E L L , C i r cui t J udge
A ppel l ant , M i chae l M ar t or ana, br ought s ui t agai ns t t he B oar d of T r us t ees of t he St eamfi t t er s L ocal U ni on 420 H eal t h, W elfa re a n d P en sion F u n d (“the B o ard ”) a ll eg ing that the B o ard i mpr op e r l y de ni e d b e ne fi t s du e t o h i m pur s ua nt t o a n ERI SA pl an. T he B oar d t hen br ought a counterclai m al l egi ng t hat M ar t or ana ow ed $4100 i n back c ont r i but i ons t ow ar d t he cos t of h e a lth c a re c o v e ra g e f

ro m O c to b e r 1 9 9 4 to D e c e m b e r 1 9 9 9

.3 T he D i s t r i ct C our t gr ant ed s um m ar y j udgm ent i n favor of the B o ard o n b o th M artoran a’s clai m an d th e B o a rd ’s count er cl ai m . T he D i s t r i ct C our t al s o aw ar ded at t or ney ’s fees t o t he B oar d fo r M ar t or ana’ s cl ai m for i ncr eas ed pens i on bene f i t s a n d d i r e c t e d t h a t t h e s e f e e s b e p a i d b y way o f t he B oar d’ s w i t hhol di ng no m or e t han $ 160 per m ont h fr om M ar t or ana’ s pens i on benef i t s . O n appea l , w e must deci de (1) w h ethe r t h e g ran t of su m m ary jud g m en t w a s p rop er, ( 2) w het her t he or der as s es s i ng fee s agai ns tM a r t o r a na’ s pens i on benef i t s cont r avene s E R I SA and i t s under l y i ng p o li cies , and (3 ) w h e th e r t h e a w a rd o f a tto rn e y ’s f

e e s w a s p ro p e r.
I

. Fact ual and Pr ocedur al B ackgr ound
M ar t oran a j oi ned t he U ni on on J ul y 27, 1972, and w o rk e d ste a d ily u n til h e su sta in e d a se rio u s inju r y w h ile p e r f o r mi n g wo r k a s a Un i o n me mb e r o n M a r c h 2 1 , 1 9 9 4

. He t hen be g an to co ll ec t W o rke rs’ C o m p en sati o n b en ef it s, w hi ch he c o n tin u e d to re c e iv e a t le a s t th ro u g h N o v e m b e r 2 0 0 3

. M a rto ra n a a p p lied f

o r S o c ial S e c u rityd isa b ili ty b e n e f its on N ovember 30, 1995, and t he Soci al Secur i t y A dm i ni s t r at i on ( SSA ) det er m i ned t hat he w as eli g i bl e for s uch bene fi t s on D ece m ber 14, 1997. A l t hough t he S S A fo und t hat M ar t or ana b e c a m e d isa b led o n M a rc h 2 1 , 1 9 9 4 , it a w a rd e d b e n e f its r e t r o a c t i v e o n l y t o No v e mb e r 1 9 9 4 b e c a u s e o f c e r t a i n t i me r e s t r i c t i o n s i mp o s e d b y f e d e r a l l a w.4 I n ad d i t i on t o hi s W or ker s ’ C om pens at i on and Soci al Secur i t y benef

i t s , M artorana r eques t ed, and r ece i ved, t he D i s abi l i t y R et i r ement Pe n sion t o w hi ch he w as ent i t l ed under t he U ni on’ s Pens i on Pl an. I n t he su m m er of 2000, M ar t or ana f irst c o n te n d e d th a t th e B o a rd h a d im p ro p e rly c a lcu late d h is d isa b ili ty p e n sio n b e n e f its b e c a u se , w h e n c a lcu latin g h is le n g th of s er vi ce ( upon w hi ch t he amount of pens i on i s bas ed) , i t fai l ed t o t ake i nt o ac co u n t t he per i od dur i ng w hi ch he r ece i ved W or ker s ’ C om pens at i on. A t i t s J ul y 2 0 , 2000 m eet i ng, t he B oar d r ej ect ed M ar t or ana’ s cl ai m beca us e under t he t er m s of t he p e n s io n p l a n “ c re d ite d h o u rs ,” b u t n o t “ c o n tr ib u tio n h o u rs ,” accrue du ri ng t he p eri od w he n a w o rker i s r ecei ving W orkers ’ C o m p e n sa tio n , an d th e c a lcu latio n o f d isa b ili ty p e n sio n b e n e f its depends o n o ne’ s t ot al cont r i but i on hour s not one’ s cr edi t ed hour s . M ar t or ana a ppeal ed t hi s deci s i on uns ucce s s ful l y t o t he B oar d.
W h i l e M a r t o r a n a was ma k i n g h i s c l a i m f o r a d d i t i onal b e n e f its, the B o a rd d e m a n d e d th a t M a rto ra n a p a y $ 4 4 0 0 in p a stdue hea l t hcar e cont r i but i ons t o t he W el far e Pl an for t he medi cal cover age he had r ece i ved bet w een O ct ober 1994 and D ece m ber 1 9 9 9

. M artoran a a rgu ed th a t th e W elfa re P lan d id n o t r eq u ir e hi m t o cont r i but e t o t he pl an w h il e he w as an “a ct i ve” par t i ci pant

. T h e B oar d poi nt ed out t hat he coul d not be an

“ a c tiv e ” p a rticip a n t in th e W e lf a re P lan w h ile s im u ltan e o u sly r ece i vi ng benef

i t s under t he Pens i on Pl an. W hen M ar t or ana re sis ted c o n trib u tin g to th e W e lf a re P lan , th e B o a r d re f

u se d to pay $30 0 o f h i s me d i c a l c l a i ms , a n d i t n o w c o n c e d e s t h a t t he5 a m o u n t o f

M a rto ra n a ’s p ast -du e h e a lth c a re c o n trib u tio n s s h o u ld b e re d u c e d b y $ 3 0 0 to $ 4 1 0 0

. M a rto ra n a in iti a ted th is a c tio n in T h e D e law a re C o u n ty C our t of C om m on Pl eas , al l egi ng t hat i n cal cul at i ng hi s y ear s of s er vi ce, and i n as sessi ng pas t

- due hea l t hcar e cont r i but i ons agai ns t hi m , t he B oar d fai l ed t o compl y w i t h t he t erm s of t he Pens i o n Pl an and W el far e Pl an, r es pect i vel y , i n vi ol at i on of E R IS A , 2 9 U

. S

. C

. § 1 0 0 1 , et s eq . , an d req u esti n g d ec laratory ju d g m e n t.
T he B oar d r emoved t he ca s e and f i l ed a c ount er cl ai m for $4100 i n pas t

- due hea l t hcar e cont r i but i ons . O n D ec em ber 22, 2 0 0 3 , the D ist ri ct C o u rt en tered an o rd e r g ran ti n g su m m ary ju d g m e n t in f

a v o r o f th e B o a rd o n a ll cla im s a n d th e re a f ter in J anuar y 2004 ent er ed a fur t her or der gr ant i ng j udgm ent i n favor of t he B oar d for $8, 217. 08 i n at t or ney ’ s fee s and cost s bas ed on t he Pens i on Pl an cl ai m , s t at i ng “[d] efe ndant m aycol l ect t he ju d g m e n t.. . o n ly b y red u c in g p lain tiff ’s m o n th ly D isa b ili ty R et i r ement Pens i on by an amount not t o excee d $160. 00 per m ont h. ” The D i s t r i ct C our t not ed “a w ar di ng t he at t or ney s fee s and cos t s i nc u r r ed i n defe ndi ng M ar t or ana’ s cl ai m for addi t i onal pens i on benef

i t s s er ves t he s oci al l y us eful pur pos e of de t er r i ng s i m i l ar un fo unded cl ai m s t hat cons um e cour t s ’ l i m i t ed re s o u rc e s .”
M ar t or ana f

i l ed t w o uns ucce s s ful m o ti o ns for re c o n s id e ra tio n in th e D is tr ic t C o u rt a n d n o w a p p e a ls to u s . On6 appe a l , we m

us t de c i de whe the r

the gr ant of s umm ary

judgm e nt agai nst Mart orana on the Pension Plan c la im and th e W el fare P lan claim

w ere p ro p er, w h eth er th e o rd er allo w in g essen tially fo r a m on th ly se t- of f o f M artorana’s pension b enefit s violate s ERI SA and i t s unde r l yi ng pol i c i e s , and whe the r the awar d of a tt orne y ’ s fe e s wa s appr opr i a t e . W e fi nd tha t the gr ant

of summ ar y ju dg m ent was approp ri at e, bu t that the Dis tr ic t Cou rt erred i n b o th th e aw ardo f atto rn ey ’s f

ees an dth e m an n er in w h ich it o rd eredth em

to b e p aid

. A cco rd in g ly , w e w ill rev erse in p art an drem an dto th e D istrict C o u rt.
Th e Di s t r i c tCou r th ad j ur i s di ct i on pur s uant t o E R I SA , 29 U

. S. C

. § 1132 ( e) and gene r al fede r al ques t i on j ur i s di ct i on p ursuant t o 2 8 U

. S

. C

. § 1 33 1. W e hav e j uri sdi ct i on ov er t h is a p p e a l u n d e r 2 8 U .S .C . § 1 2 9 1

.

I I

. Di s c us s i on A. Summ ary

Judgm e nt
M a r t o r a n a b r ou g h t h i s c l a i ms p u r s u a n t t o 2 9 U. S

. C. § 1 1 3 2 (a )(1 )(B ), in v o k in g h is rig h t to s u e u n d e r E R IS A to

“ re c o v e r b e n e f

its d u e to h im u n d e r th e ter m s o f th e p lan , to e n f o rc e h is ri g h ts u n d e r th e ter m s o f th e p lan , o r to c lar if

y h is r i g h t s t o f

u t u r e b e n e f

i t s u n d e r t h e t e r m s o f

t h e p l a n . ” We e x e rc ise p len a ry re v iew o v e r th e D ist r ic t C o u rt' s d e c isio n to grant sum m aryj ud gm ent. S ee B l ai r v. S cott S pecial t y G ases, 2 8 3 F

. 3 d 5 9 5 , 6 0 2

- 0 3 ( 3 d Ci r . 2 00 2 )

. W e a p p l y t h e s a me7 s ta n d a rd a s u s e d b y th e D is tr ic t C o u rt . Id

. I n Fi r e s t one Ti r e & Rubbe r Co. v. Br uc h, 489 U. S. 101, 1 1 5 (1 9 8 9 ), th e S up rem e C o u rt statedth at “a d en ial o f b en ef its c ha l l e nge d unde r § 1132( a ) ( 1) ( B) i s t o be r e vi e we d unde r ade novo s t andar d unl e s s the be ne fi t pl an gi ve s the a dm i ni s tr a t or or f idu ciary d iscretio n ary

au th o rity

to d eterm in e b en ef

i ts o r to c ons tr ue the t e rm s of the pl an. ” I n the pr e s e nt c a s e , the Pe ns i on P lan g iv es th e B o ard“th e so le an dab s o l u t e d iscretio n to de t e rm i ne e l i gi bi l i ty

for be ne fi t s unde r the Pl an, and t o c ons tr ue and i nt erpr e t

the pr ovi s i ons of the Pl an. . . ” Si m i l ar l y , the Welf are P lan p ro v i d e s t h at “[ t] h e T ru stees sh all h av e th e so le an dab so lu te d iscretio n to d eterm in e elig i b i lity f o r b en ef its unde r the Pl an of Be ne fi t s , and t o c ons tr ue and i nt e r

pr e t the p ro v isio n s o f

th e P lan o f

B en ef its an dth is T ru st A g reem en t...” T h e r e f o r e , w e m

u s t d e t e rm i n e w h e th e r th e d e c i s i o n s of t he Boar d i n r e

je c t i ng Mart or ana ’ s clai m s for i nc r e a s e d pe ns i on fu nd s andre qu ir ing pay

m ent of back healt

hcar e pre m ium s wer e arb itrary an dcap ricio u s. We will ov erturn the dec is ions of the Board on ly

if they we r e “ wi thout r e a s on, uns upport e d by the e vi d en ce or e rr on e ou s a s a m at te r

of l aw. Th i s s c op e of

r e vi e w i s narr ow , and ‘the cou rt is no t f

re e to substi tute it s o wn ju dg m ent for that of the [adm inis trator] in d et er m ining eli gibili ty

fo r plan be ne fi t s . ’ ” Mi t c he l l v. Ea s tm an Kodak Co. , 113 F. 3d 433, 439 (3 dC ir. 1 9 9 7 ) (citatio n s o m itted ).8 We have li ttle diff

ic ulty concluding that

the Board’s ruli ng was n o t arbitrary or ca pric ious. As noted abov e, Mart orana s ee ks to igno re the plai n provisi on s of the plan that p ro v id e th at onl y cr edi t ed hours acc r ue duri ng t he per i od w hen a w or ker i s r ece i vi ng W or ker s ’ C om pens at i on, and t he cal cul at i on of di s abi l i t y pens i on benef i t s depends not on t ot al cre d it ed h o u rs, b u t r athe r on co n tr ibu ti o n h o u rs. M artoran a’s r efus al to recogni ze t hi s r ender s hi s cl ai m , as not ed byt he D is tr ic t C o u rt , to ta lly la c k in g in m e ri t.
F urt herm ore, w e fi nd t hat t he B oard’s dete rm inat ion that M art or anawa s aRe t i r e e , and, the r e for e , r e qui r e d t o m ake co n trib u tio n s to th e h ealth care f u n d , w as sup p o rt e d b y

am p le e vi de nc e , and, m or e s pe c i fi c a l l y , by the c l e ar t e rm s of the pl an. We , there fo re , find that nei ther deci si on by

the Board was ar bi tr ary or c apr i c i ous , and wi l l a ffi rm the Di s tr i c t

Court ’ s gr ant of s umm ary

judgm e nt

on both.
B . E qu itab le S et-o f

f o f P en sio n B en ef

its
Th e Dis tr ic t Cou rt ’s awar d o f attorney ’s fees , dis cuss ed m or e fu l l y

be l ow , wa s a c c om

pani e d b y

i t s a l l ow anc e of

a m onthl y s e t

- off of Mart or ana ’ s pe ns i on be ne fi t s a s the m e thod of pay m ent of tho se fees . Martoran a co ntends on appeal that th e D istrict C o u rt’s o rd er ef f ectedan attach m e n t o r equ itab leA ppel l ees cont end t hat t he issue o f equi t abl e s et

- off i s not 1 pr oper l y befor e us beca us e i n hi s N ot i ce of A ppeal M ar t or ana onl y s t at ed t hat he w as appea l i ng t he D ece m ber 22, 2003 O r der of t he D i s t r i ct C our t , w hi ch gr ant ed s um m ar y j udgm ent t o t he B oar d on bot h cl ai m s and aw ar ded t he B oar d at t or ney ’ s fee s w it h resp ec t t o M artoran a’s i n cre ase d p en sion claim

. H o w ev er, under Fe d

. R. App

. P. 4 , t h i s Not i c e was r e q u i r e d t o b e f i l ed w i t hi n thir tyday s of t he D ece m ber 22, 2003 O r der and, t her efor e, w oul d have ha d t o have been f i l ed bef or e t he D i s t r i ct C o u rt issue d the o rde r all o w ing fo r eq u it ab le set-of f o n Jan u ary 26, 2004. Subse quent l y , i n hi s C onci s e Sum m ar yof t he C as e, f iled w it h th is C o u rt o n F e b ru a ry 2 , 2 0 0 4 , M a rto ra n a sp e c if ica lly stat ed that h e w as a p p e a ling “the o rde r of the lo w er c o u rt wh e r e i n h i s p e n s i o n b e n e f i t s a r e s u b

j e c t t o g a r n i s h me n t

. ” As we have not ed i n t he pas t , w e “w i l l exer ci s e appe l l at e j ur i s di ct i on over or der s t hat ar e not s peci fi ed i n t he not i ce of appea l w her e: ( 1) t her e i s a conne ct i on bet w een t he s peci fi ed and uns peci fi ed o rd e rs; (2 ) th e in ten tio n to a p p e a l th e u n sp e c if ied o rd e r is app arent ; and (3) t he o pp osi ng part y i s not pr ej ud i ced an d h as a ful l oppor t uni t y t o br i ef t he i s s ues . ” Pol o n ks i v. T r um p T aj M ahal A s s oci at es , 137 F. 3d 139, 144 ( 3d C i r . 1 9 9 8 ). Fur t he r mor e , “ [ i ] n t h e a t t o r n e y ’ s f e e s c o n t e x t , t h i s c o u r t h as found t hat ‘ an ade quat e conne ct i on ex i s t s bet w een a s peci fi ed or der t hat des i gnat es t he pr evai l i n g p art y for pur pos es of at t or ney ’ s fee s and an u n sp eci fi ed or der t hat quant i fi es t he a t t o r n e y ’ s f

e e a wa r d

. ” I d

. ( c i t a t i o n s o mi t t e d )

. T h e r e f o r e , we h a v e lit tle d if

f ic u ltyc o n c lu d in g th a t th e iss u e o f e q u itab le s e toff a s a m eans t o r ecoup at t or ney ’ s fee s i s pr oper l y befor e us on 9 s e t

- o f f o f h i s p e n s i o n b e n e f

i t s th a t c o n tr av e n e s E R I S A p o l i c y. 1a p p e a l. O ur r evi ew of t he D i s t r i ct C our t ’ s determ inati on t hat 2 eq u it ab le set-o f

f w a s a p erm issi b le m ea n s b y w h ich th e B o ard coul d r ecove r at t or ney ’s f ees i nvol ves exami nat i on of a concl us i on of l aw . T her efor e, our r evi ew of t hi s i s s ue i s de novo. A l l en- M y l and, I nc. v. I B M C or p. , 33 F. 3d 194, 201 ( 3d C ir

. 1 9 9 4 ). 10 He al so contends that

the a ll ow ance of

equita ble s et -off

violat es the t er m s of the Pension Plan i ts el f, and P ennsylvania law. We fi nd tha t the e qui t abl e s e t

- off doe s c ontr ave ne E R IS A and ER I SA po l i c y , and ne e d n ot di s c us s Mart or ana ’ s othe r two c ont e nt i ons . ERI SA § 206( d ) ( 1 ) m a n d at e s tha t

“ [e ]a c h pe ns i on 2 pl an s ha l l pr ovi de tha t be ne fi t s pr ovi de d unde r the pl an m ay

not b e assig n edo r alien ated .” 2 9 U .S .C . 1 0 5 6 (d )(1 ) (2 0 0 5 ). A t f irst glance , th er efore, i t wou ld se em that any atte m pt to atta ch p en sio n f u n d s w o u ld v io late th e statu te. H o w ev er, in th e p ast, w e h av e reco g n izedcertain ex cep tio n s to E R IS A ’s an tia tt a c hm ent

pr ovi s i ons . Spe c i fi c a l l y , i n Coar v. Ka z m i r , 990 F.2d14 13 (3d Cir. 19 93 ), a plan f iduciary , who was a ls o a plan p articip an t, ch allen g edth e redu ctio n o f h is p en sio n b en ef

its to a l l ow the p lan t o r e c oup the dam a ge s he c aus e d whe n he e nga ge d i n ac ons pi r a c y

t o obt a i n ki c kba c ks in e xc hange for channeli ng $2 0 m il li on from the pensi on fu nd ’s as se ts . I n C oar, we he l d that

s uc h a r e du c t i onwa s pe rm i s s i bl e . I n d oi ng s o, we o b serv edth e ap p aren t co n f lict b etw een tw o E R IS A sect i o n s - Sect i on 2 0 6 (d )(1 ) an dS ectio n 4 0 9 (a). F o r, Sect i on 40 9(a)11 m anda t e s th at a pe r s on who br e a c he s hi s or he r dut i e s t o a pension f un d “shal l b e p er sonall y

li able to m ake goo d to such pl an any l os s e s t o the pl an r e s ul t i ng f rom s uc h br e a c h.

. . and shal l be s ub

ject to such other e qu it able re li ef as th e c ou rt m ay deem approp ri at e. .. ” 29 U .S.C. § 11 09 (a ) (2 0 0 5). W e, ther efore, concluded that in the c on te xt of a r es torati on of

plan funds due t o afi duc i ary

br e a c h, ERI SA pe rm i t s a tt a c hm e nt of or se toff agai nst t

he pension b enefit s of a fidu ci ar y /plan p articip an t w h o h as co mm ittedth e b reach

. Howe ve r , i n arr i vi ng a t

thi s c onc l us i on, we obs e rve d the c aut i on wi th whi c h the Supr e m e Co urt ha s appr oa c he d the subj ec t of att ac hm ent of E RI S A p ensi on plan benefits . I n Gui dry v. She e t Me t a l W orke r s Na t ' l Pe ns i on Fund, 493 U. S. 365, 376 ( 1990) , the Court warne d:
Nor do we thi nk i t

appr opr i a t e t o appr ove any ge ne r a l i z e d e qui t abl e e xc e pt i on - - e i the r for em ploy ee m al feas ance or

fo r c r i m i na lm is cond uct

- - t o E R I S A ' s p r o h i b i t i o n o n th e a s s i g n m e n t or alie na t i on of pe ns i on be ne fi t s . Se c t i on 206( d) re flec ts a con si dere d con gres si on al po li cy choice , ade c isi on t o s a fe guar d as tr e am of i nc om e for pensioners (andthei r dependents, wh o m ay be, an d p er haps usuall y

ar e, blam el es s) , e ven if that de c i s i on pr e ve nt s othe r s fr om s e c ur i ng r e l i e f for the wrong s don e them . I f exce ptions to this po li cy12 ar e t o be m ad e, i t

i s for Congr e s s t o unde rt ake tha t t a s k. As a genera l m atte r, courts shou ld be loath to ann ou nce e qui t abl e e xc e pt i ons t o l e gi s l a t i ve r e qui r e m e nt s or pr ohi bi t i ons that ar e u nq uali fied by

the s tatutory

te xt. The cr eati on of

such e xc e pt i ons , i n our vi e w, woul d be e s pe c i a l l y pr obl e m a t i c i n the co n tex t o f an an tig arn ish m en t p ro v isio n . S u ch a p ro v isio n acts, b y d ef in itio n , to h in d er th e c o l l e ctio n o f a law f u l d eb t. A r e s tr i c t i on on garni s hm e nt the r e for e c an be de fe nde d onl y on th e v iew that the effectuat ion o f cert ai n b road soci al po li ci es so m etim es tak es p reced en ce o v er t h e d esire to d o equ ity be twe e n part i c ul ar

part i e s . I t

m ake s l i tt l e s e ns e t o a dopt s uc h a pol i c y and the n t o r e fus e e nfor c e m e nt whe ne ve r

e nfor c e m e nt appears inequita

ble. A cou rt

atte m pting to car v e ou t an ex cep tio n th at w o u ldn o t sw allo w th e ru le w o u ldb e f o rcedto dete rm ine whether

app li ca ti on of

the r ule i n p arti cular c i r c um s t anc e s w o u ld be ‘ e s pe c i a l l y ’ i ne qui t abl e . The i m pr a c t i c abi l i ty o f d efi ni ng s uc h as t andar d r e i nfor c e s our c on c l us i onthat

the i de n t i f

i c a t i onof any e xc e pt i ons ho ul d b e l e ft to C o n g ress. The r e for e , i n unde rt aki ng our ana l y s i s i n thi s c a s e , we do s o wi th the c aut i onary

a dvi c e of the Supr e m e Court i n m i nd. B ecau se th e p resen t case is f actu ally an dleg ally

d istin g u ish ab le f ro m C o ar, w e d eclin e to ex ten d th e ex cep tio n to E R IS A ’s an tigarni s hm e nt

pr ovi s i on t o e nc om

pa s s the e qui t abl e s e t

- off of pension b enefit s her e. Firs t, wh il e C o ar invo lved a per ce ived13 co n f lict b etw een tw o sectio n s o f E R IS A , § § 2 0 6 (d) a n d 4 0 9 (a), t he cas e befor e us pr es ent s no s uch conf l i ct

. W e ar e not cal l ed upon t o r econc i l e t w o s eemi ngl y cont r adict or y s ect i ons of t he s t at ut e; r at her , w e must onl y det er m i ne w het her an addi t i onal exce p t i on t o § 206( d) s houl d be made w hen a pl an par t i ci pant beco m es obli g a ted to pay t he p l an’s fees w hen he b ri ng s a f riv o lo u s la w su it. N o o th e r se c tio n o f E R IS A e v e n sp e a k s to th is s itu a tio n , m u c h le s s m a n d a tes a n e x c e p tio n in th is ci r cumst ance . S ec o n d , w e a re n o t co n fro n ted w it h a b rea ch o f f idu ciary dut y , as i n C oar . R at her , unl i ke i n C oar w her e a f i duci ar y w ho w as al s o a pl an par t i ci pant know i ngl y depr i ved t he pl an of m ill io n s o f

d o llars , in th is c a se , M a rto ra n a sim p ly e x e rc ise d h is rig h t to b rin g su it u n d e r E R I S A in o rd e r to d e ter m in e h is ent i t l ement t o cer t ai n benef i t s . T hi s i s t he ver y pur pos e of 29 U. S. C. § 1 1 3 2 ( a ) ( 1 )

. I t d o e s n o t f o l l o w fr o m t h e Di s t r i ct C our t ’ s det er m i nat i on t hat M ar toran a’ s s ui t over t he pens i on benef i t s w as fr i vol ous t hat w e s houl d a l l ow for r e c oupm e nt

of atto rn ey ’s f

ees f ro m th e b en ef

its. InC o ar w e w ere f

acedw ith d elib erate, criminal b eh av io r b y a p lan f id u c i a ry w h ich ledto deplet ion o f the fu nd . I n all ow ing equita ble s et -off

of Co ar ’s li abil it y to the pensi on fu nd agai nst his ow n b enefit s, we were s e e ki ng t o p r om ot e the pu rp os e s un de r l yi ng ER I SA

. As we s t a t e d:
Ne i the r

doe s the l e gi s l a t i ve hi s to ry of § 2 06 (d)( 1), which co urts have descr ibed as14 ‘sp arse’ an d‘in co n clu siv e’ in d icate[ s] th at a di s hone s t tr us t e e sh oul d be s hi e l de d fr om the c on s e qu e nc e s of

abr e a c h o f fiduci ary

du ty . On the c on tr ar

y , the ‘only

availa b le [legis lati ve] hi s t ory s t a t e s th a t

the obje c t i ve of the pr ovi s i on was t o ‘fu rther e ns u re that the e m ploy ee ’s a c c r ue d be ne fi t s ar e a c t

ua l l y ava i l abl e for r e t i r e m e nt

pur pos e s . . . ’ I f, a s i ndi c a t e d by the leg islativ e h isto ry , th e an ti-alien atio n p ro v isio n is i nt e nde d t o ‘ pr ot e c t

pl an be ne fi c i ari e s by e ns ur i ng tha t

pl an a s s e t s ar e us e d on l y for pay m ent of b enefit s’ we think that Con gres s’ s pur pos e ‘ woul d be unde rm i ne d, not a dvanc e d, by an inte rpre tati on that

proh ib it ed of

fset un der thes e c ir cum st ance s , ’ be ca use the Pension F un d’s a s s e t s woul d be di s s i pa t e d furthe r thro u gh pay m ents to those wh o had looted the fun d rather than being p re se rved fo r the beneficiari es ’ use

. Co ar , 990 F.2dat

14 20 (c it at ions om itte d).
W hi l e Appe l l e e s ar gue tha t thi s r a t i ona l e s houl d l e a d us t o e xt e nd Coar ’ s r e a s oni ng t o the c a s e a t hand, we de c l i ne t o do s o. W hi l e i t

m ay be ar gue d tha t

pl an part i c i pant s, l i ke Mart or ana , w h o b ri ng s ui t s whi c h ar e ul t i m a t e l y found t o be frivolou s, dese rve the sam e tr eatm ent as fidu ci ar ie s who brea ch aduty t o the Pl an and “ l oot ” the fun d , w e are not pe r s ua de d. F o r, u n lik e a d elib e r a te lo o ter, a p lan p articip an t w h o , in earnes t, bu t i n err or (and perhaps ob st inat el y) se eks t o enf orceT he ot her exce pt i ons pr ovi ded byC ongr es s al l ow for offs et 3 wh e n i t i s o r d e r e d u n de r a j u d g me n t o f c o n v i c t i o n f

o r a c r i me i nvol vi ng t he pens i on pl an and w hen offs et i s or der ed pur s uant t o a s ett lem en t agr eement bet w een t he Secr et ar y and t he pl an par t i ci pant , or a s et t l ement agr eem en t be t w een t he Pens i on B enef i t G uar ant y C or por at i on and t he par t i ci pant , i n connec t i on w i t h a v i o l a t i o n ( o r a l l e g e d v i o l a t i o n ) o f f i d u c i a r y d u t y, b y a fi duci ar y or anyot her per s on. 29 U

. S. C

. § 1056( d) ( 4) ( A ) ( i ) and (i ii)

. 15 o r clarif y p lan rig h ts h e b eliev es h e h as, d o e s n o t act w ith c om pl e t e di s r e gar d for the we l l

- be i ng of the ve ry fund whi c h he i s s uppos e d t o he l p m ana ge . The fa c t tha t ERI SA a l l ows for the awar d of a tt orne y ’ s fe e s t o the pr e va i l i ng party a t the di s c r e t i on o f th e co u rt in s u i t s su ch as th e o n e b ro u g h t b y M arto ran a is ge ne r a l l y s uffi c i e nt , we b eli e ve , t o pr e ve nt pl a i nt i ffs fr om br i ngi ng s ui t s whi c h the y know or

s tr ongl y su spe c t

t o be wi thou t m e r i t

. The r e i s no ne e d t o i nc r e a s e de t e rr e nc e by runn ing afo ul of

the s tatuto ry p rohibiti on and ass es si ng fees ag ain st th e p en sio n b en ef its o f su ch p articip an ts.
F in ally , in 1 9 9 7 , C o n g ress am en d ed§ 2 0 6 to sp ecif ically allo w f o r th e set-o f

f o f p en sio n b en ef

its in sev eral sp ecif

ic s i t ua t i ons . Congr e s s listed am ong the s e the ve ry s i t ua t i on p resen tedin C o ar, n am ely w h en a f idu ciary b reach es h is du ty to the pl an. 29 U. S. C. § 1056( d) ( 4) ( A) ( i i )

. N o n e of the 3 am e ndm e nt s t o § 206, howe ve r , s pe c i fi c a l l y appl y t o the si tuat ion w e are faced with h er e andwe re fu se to cr aft ano ther16 e xc e pt i on t o § 20 6 w here Co ng re ss has not re cogn iz edon e. The r e for e , for

the r eas ons s t a t e d above , we hol d tha t the a l l owanc e of e qui t abl e s e t

- off of a tt orne y ’ s fe e s fr om Mart orana’s pension benefits by the Dis tr ic t Cou rt contravenes ERI S A p o l i c y an d w e w i l l , th e r e f o r e , r e v e r s e th i s o r d e r

a nd r e m and for

pr oc e e di ngs c ons i s t e nt

wi th thi s opi ni on. C. Aw ar d o f A tt orney ’s Fees
Fina ll y , on app ea l, Mart orana chal le ng es the Dis tr ic t Co urt’ s award of attorney ’s fees in this ca se . As noted abov e, th e D istrict C o u rt h as d i s c r e tio n to aw ardatto rn ey ’s f ees to e i the r party in an ERI SA s ui t

. Se e 29 U. S. C. § 1132( g) ( 1) (2 0 0 5 ). We h av e p rev io u sly requ ired t h a t d istrict co u rts co n s i d e rsev eral f

acto rs b ef

o re aw ard in g su ch f

ees. T h ese i nc l ude : ( 1) the offe ndi ng party ’ s c ul pabi l i ty or b ad f ai th; ( 2) the abi l i ty

of the off

en di ng part i e s t o s a t i s fy

an awar d of attorney ’s fees ; (3) the dete rr ent e ff ec t of an award of

attorney ’s fe e s ; ( 4) the be n e fi t

c onfe rr e d upon m e m

be r s of the pe ns i on p lan as a w h o l e ; a n d (5 ) th e relativ e m erits o f th e p arties’ positio n s. Ur s i c v. Be thl e he m Mi ne s , 719 F. 2d 670, 673 ( 3d C ir. 1 9 8 3 ).
M arto ran a co n ten d s th a t th e D istrict C o u rt erredin gi vi ng t oo l i tt l e we i ght to th e fi r s t fa c t or , Mart or ana ’ s l a c k of ba d fa i th, and t oo m

uc h we i ght

t o the othe r s . Be c aus e we fi nd tha t the Di s tr i c t C o urt

gave i ns uffi c i e nt

we i ght t o the s e c ond fa c t or , Mart or ana ’ s abi l i ty t o pay , we wi l l r e ve r s e the awar d of17 a tt orne y ’ s fe e s and r e m and for furthe r c ons i de r a t i on. In consider ing M artorana’s abil it y to pay , the Distri ct Co urt fou ndthat

the rec ord did no t con ta in suff ic ie nt evidence to dete rm ine whether

or no t he c ou ld pay

an award of attorney ’s f ees, b u t d id n o te th at “[ i] t seem s lik ely th at th ese f ees an dco sts ar e not l ar ge and tha t the Boar d c oul d r e c oup the m by r e duc i ng Mart orana’s m on thly

D is abil it

y Reti re m ent Pensi on by an affo rdab le am ou nt fo r a few y ears . Our hu nches n o tw ith stan d in g , w e w ill n o t m ak e a f in al f in d in g as to Marto ra n a’s a

bili ty to pay at this ti m e. ” I nste ad, the Distri ct Court de t e rm i ne d tha t

the m onthl y

s e t

- off fr om the pe ns i on be ne fi t he wa s t o r e c e i ve woul d be appr opr i a t e . I nde e d, the Di s tr i c t C o u rt ap p e ar e d t o b e tryi n g t o h e l p M art o r an aby r e qui r i ng the pl an t o l ook onl y t o thi s m onthl y

a l l oc a t i on for s a t i s fa c t i on of th e f

ee awar d, pe rhaps i n r e c ogni t i on of Mart or ana ’ s pr obabl e l a c k of othe r r e s our c e s . Putt i ng a s i de the pos s i bi l i ty

of the e qui t able s e t

- off, the Di s tr i c t Court m a de no o th er f in d in g as to M arto ran a’s ab ility to p ay . B ecau se art i c ul a t i on by

the Di s tr i c t

Court of i t s ana l y s i s and c onc l us i ons on ea ch of

the f ive U rs ic fact ors is m andate d u nd er ou r c as e l aw befo re an aw ard is e nter ed, See McPh er son v . Em ploy ee ’s Pe ns i on Pl an of Am e r i c an Re

- I ns ur anc e Co. , I nc . , 33 F. 3d 253, 2 5 4 (3 dC ir. 1 9 9 4 ), w e h o ld th at th e D istrict C o u rt’s f ailu re to c ons i de r Mart or ana ’ s abi l i ty

t o pay wi thout the p o ssi bi l i ty

of equita ble s et -off

was e rr or. We will ther efore re vers e the award of a tt orne y ’ s fe e s and r e m and for furthe r pr oc e e di ngs c ons i s t e nt wi th thi s opi ni on.18 I I I

. Conc l us i on B ased on the r e a s oni ng above , we wi l l AFFI RM the De c e m be r 22, 2003 or de r

of the Di s tr i c t

Court gr ant i ng s um m ary ju dg m e nt

t o the Bo ar d on bo th c l a i m s . Ho we ve r , we will RE VE RS E the Janu ar y 26 , 200 4 o rder

of the Dis tr ic t Cou rt g ran tin g atto rn ey ’s f

ees to th e b o ardan dallo w in g f o r th eir re coup m ent throu gh an equita bl e set- of

f o f M artorana’s m o n th ly p en sio n b en ef

its.

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