Court Opinion

ID: 9475829
Source: CourtListenerOpinion
Date Created: 2023-08-05 05:39:27.915203+00
Date Added: 2024-06-11T17:44:57.772240
License: Public Domain

WELLFORD, Circuit Judge,
dissenting.
I respectfully dissent and would reverse the decision of the district court. I find the decision in St. Paul Fire & Marine Ins. Co. v. Cox, 752 F.2d 550 (11th Cir.1985) to be persuasive and even compelling under the circumstances of this case, and it would mandate reversal.
ERISA was established to protect “the continued well-being and security of millions of employees and their dependents” by providing “minimum standards ... assuring the equitable character of [pension fund] plans and their financial soundness.” 29 U.S.C.A. § 1001(a). These standards are intended to protect the employee against mismanagement or *301the provision of misinformation by the employer. The legislation provides no indication whatsoever that it is intended to protect the employee against the consequences of his own misdeeds.
Id. at 552.
As stated in Cox, “a wrongdoer should not profit from his [or her] misdeeds,” and protection or insulation of the interest of a defalcating and defrauding, employee who has wrongfully taken over $440,000 of her employer’s funds and fled from the country surely does “not protect the financial interests of other employees or promote security in the workplace,” the principal aims of ERISA. Id. at 552. It should be remembered in this case that the plan involved is a profit sharing plan for the benefit of all eligible employees. We may readily infer that the wrongful taking of substantial funds had an adverse effect on the profits of United Metal Products and, consequently on other employees under the plan. United Metal now seeks court assistance in using the amount in Coelho’s account to reimburse the profit sharing plan for the benefit of remaining employees, not for the company’s benefit.
In enacting ERISA Congress was concerned about “bad boy” forfeiture provisions in pension plans whereby the employer might challenge or preclude payments of vested pension or retirement benefits in cases of alleged disloyalty or deficient performance in enacting ERISA. That concern, however, is no basis to attribute to Congress an intent to protect a fraudulent employee, especially one found after court proceedings to have engaged in conduct criminal in nature and inimical, not only to the employer, but to fellow employees whom ERISA is designed to protect. The court in Ellis National Bank v. Irving Trust Co., 786 F.2d 466 (2d Cir.1986), acknowledged the “equitable appeal” of Cox, supra, but declined to follow its sound reasoning. I disagree with the conclusion that to permit a garnishment for the benefit of fellow employees in a case of this kind would “threaten the fundamental objective envisioned by Congress.” 786 F.2d at 471. Nor would a narrow exception to the general anti-alienation provisions of ERISA, limited to the outrageous and undisputed wrongful criminal type of misconduct here involved, produce the conjured “boundless stream of suits and disputes” referred to in Vink v. SHV North America Holding Corp., 549 F.Supp. 268, 273 (S.D.N.Y.1982).
Reasons for the family support exception to ERISA anti-alienation language, already recognized and acknowledged, are no more compelling than reasons for a narrow exception in a case of this type in which an employee who has in effect, at least indirectly, defrauded fellow employees participating in a profit sharing plan. See Guidry v. National Sheet Metal Workers, 641 F.Supp. 360 (D.Colo.1986) (finding “narrow exception” to allow .constructive trust on pension plan funds when union officer had embezzled funds from union pension plan); National Bank of N. America v. Int’l Brotherhood of Electrical Workers, 69 A.D.2d 679, 419 N.Y.S.2d 127 (Sup.Ct.) appeal dismissed, 48 N.Y.2d 752, 422 N.Y.S. 666, 397 N.E.2d 1333 (1979) (ERISA’s antialienation provision does not pre-empt or preclude judgment creditor’s state statutory rights).
I would reverse and remand for the district court to consider whether the plaintiff in this case has met the reasoning and logic of the Cox rule, which I would adopt in this circuit.