Court Opinion

ID: 8915259
Source: CourtListenerOpinion
Date Created: 2022-11-27 04:44:49.015078+00
Date Added: 2024-06-11T17:08:55.232609
License: Public Domain

GOODWIN, Circuit Judge.
Three union members owe the State of California $48.70, $206.95 and $124.91 in unpaid personal income tax. The Franchise *1308Tax Board of California levied against money held in trust for the three by the Construction Laborers’ Vacation Trust Fund. When trustees for the fund refused to pay over the money owed, the state brought action for declaratory relief. The district court,1 on cross motions for summary judgment, held that the vacation fund was not protected from the levy.
The Trust appeals on the ground that ERISA (Employee Retirement Income Security Act of 1974, 29 U.S.C. §§ 1001 et seq.) preempts California’s attempt to levy on the vacation trust for unpaid taxes. The Trust relied on an ERISA Advisory Opinion from the Department of Labor. The state relies on the difference between vacation benefits and retirement benefits, and asserts that Congress intended to protect only the latter.
The facts are undisputed. Much of the law is likewise undisputed. When delinquent taxes are owed to the State of California, the state is authorized to issue a notice to withhold under California Revenue and Taxation Code, § 18817, which reads:
“The Franchise Tax Board may by notice, served personally or by first class mail, require any employer, person, officer or department of the State, political subdivision or agency of the State ... having in their possession, or under their control, any credits or other personal property or other things of value, belonging to a taxpayer or to an employer or person who has failed to withhold and transmit amounts due pursuant to Section 18815 or 18818, to withhold, from credits or other personal property or other things of value, the amount of any tax, interest, or penalties due from the taxpayer ... and to transmit the amount withheld to the Franchise Tax Board at such time as it may designate.”
ERISA specifies that its provisions “shall supersede any and all State laws insofar as they may now or hereafter relate to any employee benefit plan ... . ” 29 U.S.C. § 1144(a). An employee benefit plan is defined as a welfare plan or a pension plan. 29 U.S.C. § 1002(3). A welfare benefit plan, in turn, is defined as a plan with “medical, surgical . .. accident, disability ... or vacation benefits.” 29 U.S.C. § 1002(1).
The Trust in the instant case is an employee benefit trust to which employer parties to collective bargaining agreements with the Southern California District Council of Laborers must contribute. Contributions are made for each hour worked or are otherwise paid pursuant to the bargaining agreement.
The Trust maintains a “vacation account” for each laborer and at a specific time gives him or her a check for his or her accumulated vacation benefits. The Trust is a spendthrift trust designed to insure that the beneficiaries do not dissipate the benefits. Article 9.08 of the Trust Agreement provides:
“It is the intent and purpose of the Plan, and of this Agreement, and a material part of the consideration for the making of contributions to the Fund by individual employers, that the money in each vacation account shall be received by the employee entitled thereto personally. Accordingly, no payments due the Fund and no monies in the vacation accounts established pursuant to the Plan shall be subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance or charge by any employee or other person and any such anticipation, alienation, sale, transfer, assignment, pledge, encumbrance or charge shall be void and ineffective. The money credited to the vacation account shall be subject to withdrawal and distribution only at the times, and in the manner and for the purposes specified in this Agreement.” [Emphasis added.]
*1309In a similar vein, § 4.06 of the Trust Agreement restrains the beneficiaries from alienating the accumulated money and specifies that the money “shall be exempt from the claims of creditors or other claimants from all orders, decrees, garnishments, executions or other legal or equitable process or proceedings.”
ERISA does not in so many words protect vacation trusts from creditors’ claims, as it does protect pension plans. 29 U.S.C. § 1056(d)(1). Extending similar protection to vacation funds is consistent with the statute, however, if not demanded by it. Both types of ERISA plans have the same goal: to provide accumulated money to a worker for future beneficial use. The worker’s money deserves trust protection from dissipation regardless of the purpose for which the money has been set aside under ERISA.
While the state has pointed out differences between pension funds which are conceded to be protected and vacation funds which the state seeks to reach for tax collection, the state has not identified a legal basis to warrant a retreat from preemption. Moreover, Congress has not left us at liberty to construe preemption as the state would have us construe it.
The same chapter of ERISA that describes the scope of protection of employee pension benefits provides for federal preemption in connection with welfare benefit plans. 29 U.S.C. § 1144(a). See Alessi v. Raybestos-Manhattan, Inc., 451 U.S. 504, 522, 101 S.Ct. 1895, 1905, 68 L.Ed.2d 402 (1981).
The vacation trust fund now before the court is obviously a benefit plan described in § 1002(1). Accordingly, under the teaching of the Alessi case, which had not been decided when this matter was before the district court, we have no choice but to reverse with directions to enter judgment for the appellants.
The judgment in favor of the state is vacated and the cause is remanded for the entry of a declaratory judgment in favor of the appellants as prayed for in their cross-motion for summary judgment. Each party is to pay its own costs.

. If the case were a challenge to a tax, 28 U.S.C. § 1341 would preclude removal jurisdiction. But here the state is challenging a trust created under a federal statute. A fiduciary under 29 U.S.C. § 1002(14)(A) has been sued and moved to remove the case to the district court. The trust has raised a federal question under ERISA and 29 U.S.C. § 1132 makes the amount in controversy immaterial.