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GUIDRY v. SHEET METAL WORKERS NATIONAL PENSION FUND ET AL.

SUPREME COURT OF THE UNITED STATES No. 88-1105 110 S. Ct. 680, 493 U.S. 365, 107 L. Ed. 2d 782, 58 U.S.L.W. 4131, 1990.SCT.40486 <http://www.versuslaw.com> decided: January 17, 1990. GUIDRYv.SHEET METAL WORKERS NATIONAL PENSION FUND ET AL. CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE TENTH CIRCUIT. Eldon E. Silverman, argued the cause for petitioner. With him on the briefs were Scott Gelman and Kenneth T. Eichel. Joseph M. Goldhammer, argued the cause for respondents. With him on the brief were Walter C. Brauer III and Ellen M. Kelman.*fn* Blackmun, J., delivered the opinion of the Court, in which Rehnquist, C. J., and Brennan, White, Stevens, O'connor, Scalia, and Kennedy, JJ., joined, and in all but Part II-C of which Marshall, J., joined. Author: Blackmun


CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE TENTH CIRCUIT.

Blackmun, J., delivered the opinion of the Court, in which Rehnquist, C. J., and Brennan, White, Stevens, O'connor, Scalia, and Kennedy, JJ., joined, and in all but Part II-C of which Marshall, J., joined.

Author: Blackmun

 JUSTICE BLACKMUN delivered the opinion of the Court.

Petitioner Curtis Guidry pleaded guilty to embezzling funds from his union. The union obtained a judgment against him for $275,000. The District Court imposed a constructive trust on Guidry's pension benefits, and the United States Court of Appeals for the Tenth Circuit affirmed that judgment. Petitioner contends that the constructive trust violates the statutory prohibition on assignment or alienation of pension benefits imposed by the Employee Retirement Income Security Act of 1974 (ERISA), 88 Stat. 829, as amended, 29 U.S.C. § 1001 et seq. (1982 ed.).*fn1

I

From 1964 to 1981, petitioner Guidry was the chief executive officer of respondent Sheet Metal Workers International Association, Local 9 (Union). From 1977 to 1981 he was also a trustee of respondent Sheet Metal Workers Local No. 9 Pension Fund. Petitioner's employment made him eligible to receive benefits from three union pension funds.*fn2

In 1981, the Department of Labor reviewed the Union's internal accounting procedures. That review demonstrated that Guidry had embezzled substantial sums of money from the Union. See App. 20. This led to petitioner's resignation. A subsequent audit indicated that over $998,000 was missing. Id., at 26. In 1982, petitioner pleaded guilty to embezzling more than $377,000 from the Union, in violation of § 501(c) of the Labor-Management Reporting and Disclosure Act of 1959 (LMRDA), 73 Stat. 536, 29 U.S.C. § 501 (c) (1982 ed.).*fn3 Petitioner began serving a prison sentence. In April 1984, while still incarcerated, petitioner filed a complaint against two of the plans in the United States District Court for the District of Colorado, alleging that the plans had wrongfully refused to pay him the benefits to which he was entitled.*fn4 The Union intervened, joined the third pension plan as a party, and asserted six claims against petitioner.*fn5 On the first five claims, petitioner and the Union stipulated to the entry of a $275,000 judgment in the Union's favor. App. 52-58. Petitioner and the Union agreed to litigate the availability of the constructive trust remedy requested in the sixth claim. Id., at 58.

Petitioner previously had negotiated a settlement with the Local No. 9 Pension Fund. Id., at 44-46.*fn6 The other two plans, however, contended that petitioner had forfeited his right to receive benefits as a result of his criminal misconduct. Id., at 47-50. In the alternative those plans contended that, if petitioner were found to have a right to benefits, those benefits should be paid to the Union rather than to Guidry. Ibid.

The District Court therefore was confronted with three different views regarding the disbursement of petitioner's pension benefits. Petitioner contended that the benefits should be paid to him. The two funds argued that the benefits had been forfeited. The Union asserted that the benefits had not been forfeited, but that a constructive trust should be imposed so that the benefits would be paid to the Union rather than to petitioner.

The District Court first rejected the funds' claim that petitioner had forfeited his right to benefits. 641 F.Supp. 360, 362 (Colo. 1986). The court relied on § 203(a) of ERISA, 29 U.S.C. § 1053(a) (1982 ed.), which declares that "each pension plan shall provide that an employee's right to his normal retirement benefit is nonforfeitable" if the employee meets the statutory age and years of service requirements. 641 F. Supp., at 361-362. The court noted other District Court and Court of Appeals decisions holding that pension benefits were not forfeitable even upon a showing of the covered employee's misconduct. Id., at 362.*fn7

The court concluded, however, that the prohibition on assignment or alienation of pension benefits contained in ERISA's § 206(d)(1), 29 U.S.C. § 1056(d)(1) (1982 ed.), did not preclude the imposition of a constructive trust in favor of the Union. The court appeared to recognize that the anti-alienation provision generally prohibits the garnishment of pension benefits as a means of collecting a judgment. The court, nevertheless, stated: "ERISA must be read in pari materia with other important federal labor legislation." 641 F.Supp., at 362. In the Labor Management Relations Act, ed.), and in the LMRDA, Congress sought to combat corruption on the part of union officials and to protect the interests of the membership. Viewing these statutes together with ERISA, the District Court concluded: "In circumstances where the viability of a union and the members' pension plans was damaged by the knavery of a union official, a narrow exception to ERISA's anti-alienation provision is appropriate." 641 F.Supp., at 363. The court therefore ordered that benefits payable to petitioner from all three funds should be held in constructive trust until the Union's judgment and interest thereon were satisfied. Ibid.

The United States Court of Appeals for the Tenth Circuit affirmed. 856 F.2d 1457 (1988). The court concluded that ERISA's anti-alienation provision could not be invoked to protect a dishonest pension plan fiduciary whose breach of duty injured the beneficiaries of the plan. The court deemed it "extremely unlikely that Congress intended to ignore equitable principles by protecting individuals such as [petitioner] from the consequences of their misconduct." Id., at 1460. The court concluded that "the district court's imposition of a constructive trust on [petitioner's] pension benefits both accorded with . . . principles of trust law and was well within its discretionary power as defined by the common law and ERISA." Id., at 1461.*fn8 Because Courts of Appeals have expressed divergent views concerning the availability of exceptions to ERISA's anti-alienation provision,*fn9 we granted certiorari, 492 U.S. 904 (1989).

II

Both the District Court and the Court of Appeals presumed that § 206(d)(1) of ERISA erects a general bar to the garnishment of pension benefits from plans covered by the Act. This Court, also, indicated as much, although in dictum, in Mackey v. Lanier Collection Agency & Service, Inc., 486 U.S. 825 (1988). In Mackey the Court held that ERISA does not bar the garnishment of welfare (e.g., vacation) benefits. In reaching that conclusion, it noted that § 206 (d)(1) proscribes the assignment or alienation of pension plan benefits, but that no comparable provision applies to ERISA welfare benefit plans. Id., at 836. It reasoned that "when Congress was adopting ERISA, it had before it a provision to bar the alienation or garnishment of ERISA plan benefits, and chose to impose that limitation only with respect to ERISA pension benefit plans, and not ERISA welfare benefit plans." Id., at 837 (emphasis in original). The view that the statutory restrictions on assignment or alienation of pension benefits apply to garnishment is consistent with applicable administrative regulations,*fn10 with the relevant legislative history,*fn11 and with the views of other federal courts.*fn12 It is also consonant with ...


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