Opinion ID: 201075
Heading Depth: 2
Heading Rank: 2

Heading: ERISA benefits

Text: 23 We turn to the court's refusal to strike ERISA benefits from the order. We first clear away the issue of whether state law presents any barrier to the May 30 order. The parties dispute whether the order was issued under Fed.R.Civ.P. 69 (post-judgment executions) or Fed.R.Civ.P. 64 (pre-judgment orders). Under either rule, the order must comport with the law of the state in which the district court is held (here, Massachusetts), except that any federal statute governs to the extent applicable. 6 24 David raises a belated argument that the order violates Massachusetts law, which requires that amounts held by a trustee for a defendant in a pension shall be reserved in the hands of the trustee and shall be exempt from attachment. Mass. Gen. L. ch. 246, § 28 (defining pension as including all ERISA pensions). This argument has been waived, as it was made for the first time in David's reply brief. Andresen v. Diorio, 349 F.3d 8, 13 (1st Cir.2003). Moreover, even were it not waived, the argument fails on the merits. Section 28 is not applicable because the order does not affect amounts held in trust for David by a third-party; the order directs David himself to deposit pension funds in the designated bank account after those funds reach his hands. 25 David's primary argument is that the order violates federal law: namely, ERISA's anti-alienation provision, 29 U.S.C. § 1056(d)(1). Jennifer responds that § 1056(d)(1) does not restrict alienation of pension benefits that have already been distributed to plan beneficiaries. If Jennifer is correct, the May 30 order does not violate § 1056(d)(1) because the order applies only after the pension benefits are disbursed to David each month. 26 Four of the five courts of appeals to consider the question have construed § 1056(d)(1) as applying to benefits only while held by the plan administrator and not after they reach the hands of the beneficiary. Wright v. Riveland, 219 F.3d 905, 919-21 (9th Cir.2000); Robbins v. DeBuono, 218 F.3d 197, 203 (2d Cir.2000); Guidry v. Sheet Metal Workers Nat'l Pension Fund, 39 F.3d 1078, 1081-83 (10th Cir.1994) (en banc); Trucking Employees of North Jersey Welfare Fund, Inc. v. Colville, 16 F.3d 52, 54-56 (3d Cir.1994). One court has held that § 1056(d)(1) bars alienation of benefits after distribution to the beneficiary if those benefits are post-retirement annuity payments (but not if they are pre-retirement lump sum payments). United States v. Smith, 47 F.3d 681, 682-84 (4th Cir.1995). We join the majority view. 27 The plain language of § 1056(d)(1) is that [e]ach pension plan shall provide that benefits provided under the plan may not be assigned or alienated. That language governs only the plan itself. Standing alone, it does not read comfortably as a prohibition against creditors reaching pension benefits once they have left the hands of the administrator. Robbins, 218 F.3d at 203. If Congress had intended § 1056(d)(1) to reach that far, it could easily have employed the type of language found, for example, in the Veterans Benefits Act, 38 U.S.C. § 5301(a), which prohibits attachment of benefits either before or after receipt by the beneficiary. That Congress chose not to do so is significant. 28 The regulations promulgated by the Secretary of Treasury, who has the authority to implement § 1056(d) of ERISA, 7 further reinforce our interpretation. Those regulations, which are entitled to deference under Chevron, U.S.A., Inc. v. Nat. Res. Def. Council, Inc., 467 U.S. 837, 844, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984), define the terms assignment and alienation to cover: 29 (i) Any arrangement providing for the payment to the employer of plan benefits which otherwise would be due the participant under the plan, and 30 (ii) Any direct or indirect arrangement (whether revocable or irrevocable) whereby a party acquires from a participant or beneficiary a right or interest enforceable against the plan in, or to, all or any part of a plan benefit payment which is, or may become, payable to the participant or beneficiary. 31 26 C.F.R. § 1.401(a)-13(c)(1) (emphasis added). Once benefits are distributed to the beneficiary, a creditor's rights are enforceable against the beneficiary, not against the plan itself; accordingly, under the regulations, § 1056(d)(1) does not apply. The Treasury Secretary's interpretation is a reasonable one, and given that Chevron deference applies, we decline to disturb it. 32 The only court to have disagreed with this interpretation is the Fourth Circuit in Smith. There, the majority held, over a dissent, that § 1056(d)(1) prohibits alienation of pension funds after the funds are distributed when those funds are received as annuity payments during retirement, but not when those funds are received as a lump sum payment before retirement. 47 F.3d at 683. The Smith majority relied primarily on Hisquierdo v. Hisquierdo, 439 U.S. 572, 99 S.Ct. 802, 59 L.Ed.2d 1 (1979), which held that the anti-alienation provision of the Railroad Retirement Act (RRA), 45 U.S.C. § 231m(a), covers benefits after they are disbursed to beneficiaries. 439 U.S. at 583, 99 S.Ct. 802; see also Smith, 47 F.3d at 683-84. 33 We read the statute differently. Nothing in ERISA or in the regulations supports a distinction in the anti-alienation provision between pre-retirement lump sum payments and post-retirement annuity payments. And Hisquierdo is not a useful analogy because of differences in language between the anti-alienation provision of the RRA and that of ERISA. The RRA provides, in relevant part, that: 34 Notwithstanding any other law of the United States, or of any State, territory, or the District of Columbia, no annuity or supplemental annuity shall be assignable or be subject to any tax or to garnishment, attachment, or other legal process under any circumstances whatsoever, nor shall the payment thereof be anticipated. 35 45 U.S.C. § 231m(a) (emphasis added). In concluding that Congress intended § 231m to reach benefits after distribution, the Supreme Court emphasized the fact that the statute was written broadly to prohibit creditors from subjecting the annuity to any legal process under any circumstances whatsoever. Hisquierdo, 439 U.S. at 586, 99 S.Ct. 802. No similarly sweeping language exists in ERISA's anti-alienation provision. 8