Opinion ID: 175595
Heading Depth: 2
Heading Rank: 1

Heading: Garnishment of Pension Benefits Under the MVRA

Text: The appellants assert that the United States may not garnish pension benefits under the MVRA because (1) § 401(a)(13) of the Internal Revenue Code (IRC) makes pension benefits inalienable; (2) the Tenth Amendment to the United States Constitution precludes the United States from garnishing pension funds controlled by the LSPRF; and (3) Louisiana constitutional and statutory law exempt pension benefits from garnishment.
The LSPRF argues that the defendants' pension benefits are exempt from garnishment because the IRC prohibits the assignment or alienation of retirement benefits. I.R.C. § 401(a)(13)(A). Section 401(a)(13)(A) states that [a] trust shall not constitute a qualified trust under this section unless the plan of which such trust is a part provides that benefits provided under the plan may not be assigned or alienated. This circuit has never addressed whether § 3613(a) of the MVRA overrides § 401(a)(13) of the IRC. Section 3613(a) of the MVRA states that  Notwithstanding any other Federal law ... a judgment imposing a fine may be enforced against all property or rights to property of the person fined. (emphasis added). This language is qualified only by the enumerated exceptions contained in § 3613(a)(1)-(3). We conclude that the language in § 3613(a) authorizing the United States to enforce a garnishment order against all property or rights to property of the debtor, [n]otwithstanding any other Federal law, is sufficient to override the anti-alienation provision of the IRC. Several factors compel us to conclude that the MVRA allows garnishment of a defendant's retirement benefits to satisfy a criminal restitution order. First, the Supreme Court has recognized that the use of a notwithstanding clause signals Congressional intent to supersede conflicting provisions of any other statute. Cisneros v. Alpine Ridge Group, 508 U.S. 10, 18, 113 S.Ct. 1898, 123 L.Ed.2d 572 (1993) ([T]he use of such a `notwithstanding' clause clearly signals the drafter's intention that the provisions of the `notwithstanding' section override conflicting provisions of any other section. Likewise, the Courts of Appeals generally have interpreted similar `notwithstanding' language ... to supersede all other laws, stating that a clearer statement is difficult to imagine.) (internal quotation marks and citations omitted). The appellants argue that the notwithstanding clause is insufficient to override the anti-alienation language in § 401(a)(13) of the IRC under the Supreme Court's decision in Guidry v. Sheet Metal Workers National Pension Fund, 493 U.S. 365, 110 S.Ct. 680, 107 L.Ed.2d 782 (1990). In Guidry, the Supreme Court was faced with the question of whether § 501(b) of the Labor-Management Reporting and Disclosure Act of 1959 (LMRDA)which provided pension funds with a private right of action to recover damages or secure an accounting or other appropriate relief for the benefit of the labor organizations allowed the government to create a constructive trust on a defendant's pension benefits. The Court held that the other appropriate relief language in the LMRDA was insufficient to override the anti-alienation provision in § 206(d) of the Employee Retirement Income Security Act (ERISA). Id. at 375-76, 110 S.Ct. 680 (We do not believe that congressional intent would be effectuated by reading the LMRDA's general reference to `other appropriate relief' as overriding an express, specific congressional directive that pension benefits not be subject to assignment or alienation.). Unlike the general other appropriate relief language contained in the LMRDA, the notwithstanding any other Federal law clause signals a clear Congressional intent to override conflicting federal law. Indeed, we agree with our sister circuit that it appears that Congress accepted the Supreme Court's invitation in Guidry by enacting the [MVRA]. United States v. Irving, 452 F.3d 110, 126 (2d Cir.2003); see also United States v. Novak, 476 F.3d 1041, 1053 (9th Cir.2007) (en banc) (In sum, all standard principles of statutory construction support the conclusion that MVRA authorizes the enforcement of restitution orders against retirement plan benefits, the anti-alienation provision of ERISA notwithstanding.). Our conclusion is bolstered by the fact that Congress exempted certain retirement plans from garnishment under the MVRA, see § 3613(a)(1) (incorporating the exemptions in IRC § 6334(a)(6) for certain federal annuity and pension payments), but did not include state-run pension plans in the list. Cf. Waggoner v. Gonzales, 488 F.3d 632, 636 (5th Cir.2007) (The canon of statutory construction ` expressio unius est exclusio alterius (the expression of one thing is the exclusion of another)' indicates that [the listed ground] is the only requirement.) (citation omitted). Second, reading § 3613(a) to allow garnishment of the defendants' retirement benefits is consistent with the MVRA's statutory scheme and purpose. The only property exempt from garnishment under § 3613(a) is property that the government cannot seize to satisfy the payment of federal income taxes. 18 U.S.C. § 3613(a). Section 3613(c) underscores the Congressional directive that restitution orders should be satisfied in the same manner as tax liabilities. 18 U.S.C. § 3613(c) (stating that an order of restitution imposed under this chapter is a lien in favor of the United States on all property and rights to property of the person fined as if the liability of the person fined were a liability for a tax assessed under the Internal Revenue Code of 1986 ) (emphasis added). As we have already recognized, pension plan benefits are subject to levy under the IRC to collect unpaid taxes. See Shanbaum v. United States, 32 F.3d 180, 183 (5th Cir.1994); see also Irving, 452 F.3d at 126 (ERISA pension plans are not exempted from payment of taxes under 26 U.S.C. § 6334 [of the IRC], and thus they should not be exempted from payment of criminal fines.... Moreover, § 3613(c) [of the MVRA] demands that criminal fines in favor of the United States should be enforced in the same manner as a tax liability would be enforced.). Third, other circuit and district courts have concluded that the United States may garnish a defendant's pension benefits to satisfy a restitution order, despite similar anti-alienation language contained in § 206(d) of ERISA. See Irving, 452 F.3d at 126; Novak, 476 F.3d at 1053; United States v. Lazorwitz, 411 F.Supp.2d 634, 637 (E.D.N.C.2005) (holding that neither ERISA's anti-alienation provision, 29 U.S.C. § 1056(d)(1), nor the anti-alienation provision in the Internal Revenue Code, 26 U.S.C. § 401(a)(13), provide a bar to the garnishment of a qualified pension plan). Section 206(d) of ERISA states: Each pension plan shall provide that benefits provided under the plan may not be assigned or alienated. 29 U.S.C. § 1056(d)(1). We find these cases persuasive, see Patterson v. Shumate, 504 U.S. 753, 759, 112 S.Ct. 2242, 119 L.Ed.2d 519 (1992) (referring to IRC § 401(a)(13) and ERISA § 206(d) as coordinate section[s] containing similar restrictions), and conclude that § 3613(a) of the MVRA authorizes the United States to garnish retirement benefits, notwithstanding the anti-alienation provision in § 401(a)(13) of the IRC.
The appellants also argue that the garnishment writs violate the Tenth Amendment to the United States Constitution. This claim hinges on the appellants' contention that federal law does not govern state-run benefit plans and the MVRA does not supersede Louisiana's broad police powers. We reject the appellants' Tenth Amendment argument. The Tenth Amendment declares that powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people. U.S. CONST. amend. X. When Congress properly exercises its authority under an enumerated constitutional power, the Tenth Amendment is not implicated. See New York v. United States, 505 U.S. 144, 156, 112 S.Ct. 2408, 120 L.Ed.2d 120 (1992); Deer Park Indep. Sch. Dist. v. Harris County Appraisal Dist., 132 F.3d 1095, 1099 (5th Cir.1998). The appellants do not contest that Congress passed the MVRA and FDCPA pursuant to an enumerated constitutional power. [7] Nor do the appellants contest that the Necessary and Proper Clause grants Congress the authority to craft appropriate penalties to enforce its criminal laws. United States v. Comstock, ___ U.S. ___, 130 S.Ct. 1949, 1958, 176 L.Ed.2d 878 (2010) (Neither Congress' power to criminalize conduct, nor its power to imprison individuals who engage in that conduct, nor its power to enact laws governing prisons and prisoners, is explicitly mentioned in the Constitution. But Congress nonetheless possesses broad authority to do each of those things in the course of `carrying into Execution' the enumerated powers `vested by' the `Constitution in the Government of the United States,' Art. I, § 8, cl. 18authority granted by the Necessary and Proper Clause.). [8] The appellants assert that allowing the United States to garnish pension benefits administered by the LSPRF violates the Tenth Amendment because the federal government is interfering with state administration of pension benefits. The appellants argument here is misdirected. Garnishing DeCay's and Barre's pension benefits has no effect on Louisiana state law; rather it penalizes DeCay and Barre for violating federal law. While the LSPRF is implicated as a garnishee, its pension system is not altered by requiring the LSRPF to pay the United States, rather than the judgment-debtors. Further, to the extent that a state desires to participate in the management of pension benefits, it must submit to federal criminal and civil laws allowing for debt-collection measures. 28 U.S.C. § 3003(d) (stating that the FDCPA shall preempt State law to the extent such law is inconsistent with a provision of this chapter). The federal government's inability to garnish state-run pension benefits would substantially impair the effectiveness of the FDCPA and MVRA. See United States v. Phillips, 303 F.3d 548, 551 (5th Cir.2002) (The FDCPA... provides a uniform system for prosecutors to follow rather than resorting to the non-uniform procedures provided by the states.). Because the United States has the constitutional authority to impose mandatory restitution for particular federal crimes and seek garnishment of any available resources to satisfy that restitution order, we reject the appellants' Tenth Amendment challenge.
The appellants assert that the United States lacks the authority to garnish DeCay's and Barre's pension benefits because Louisiana law precludes enforcement of a restitution order against pension benefits. See LA. CONST. art. X, § 29(E)(5)(a) (1974); LA.REV.STAT. § 11:2182 (1991). To the extent Louisiana law is inconsistent with the FDCPA and MVRA, Louisiana law is preempted. 28 U.S.C. § 3003(d); see also United States v. Wilson, No. CR-305-008, 2007 WL 4557774, at  n. 2 (S.D.Ga. Dec.20, 2007) (To the extent that state law ... conflicts with federal law authorizing the garnishment of Defendant's pension benefits, it is preempted.); United States v. McClanahan, No.3:03-00053, 2006 WL 1455698, at  (S.D.W.Va. May 24, 2006) (Although West Virginia prohibits the garnishment of state pensions, federal law expressly preempts state exemptions when the federal government is attempting to collect a fine or restitution.). In sum, the MVRA authorizes the United States to use its civil enforcement powers to garnish a defendant's retirement plan benefits, notwithstanding the fact that pension benefits are generally inalienable under federal and state law.