CURTIS GUIDRY, PETITIONER V. SHEET METAL WORKERS NATIONAL PENSION FUND, ET AL. No. 88-1105 In the Supreme Court of the United States October Term, 1989 On Writ of Certiorari to the United States Court of Appeals for the Tenth Circuit Brief for the United States as Amicus Curiae Supporting Petitioner TABLE OF CONTENTS Question Presented Interest of the United States Statement Summary of argument Argument: I. ERISA's anti-alienation provision bars imposition of a constructive trust on the pension benefits of a former union officer who embezzled union funds A. ERISA's anti-alienation provision prohibits garnishment of pension benefits B. This Court should not infer a general criminal misconduct exception to ERISA's anti-alienation clause for the benefit of employers C. The facts of this case do not warrant recovery on the ground that a fiduciary has breached his duty to a pension plan D. The remedial provision of the Labor-Management Reporting and Disclosure Act does not override ERISA's anti-alienation clause II. If ERISA does not bar the constructive trust, the Consumer Credit Protection Act protects 75 per cent of petitioner's monthly pension benefits Conclusion QUESTIONS PRESENTED 1. Whether the anti-alienation provision of the Employee Retirement Income Security Act (ERISA), 29 U.S.C. 1056(d)(1), bars the imposition of a constructive trust on the pension benefits of a former union officer who embezzled union funds. 2. If ERISA does not bar such a remedy, whether 75 percent of petitioner's monthly pension benefits are protected from garnishment by the federal Consumer Credit Protection Act, even if petitioner did not object to the garnishment in accordance with the procedural requirements of state garnishment law. INTEREST OF THE UNITED STATES Petitioner embezzled funds from his union while he was its chief executive officer, and the union seeks to garnish his pension accounts to recover its losses. This case therefore concerns the relationships among three federal statutes: the Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. 1001 et seq.; the Labor-Management Reporting and Disclosure Act of 1959 (LMRDA), 29 U.S.C. 401 et seq.; and the Consumer Credit Protection Act (CCPA), 15 U.S.C. 1671 et seq. ERISA's prohibition on assignment or alienation of pension benefits, 29 U.S.C. 1056(d)(1), is at the heart of the case. The Secretary of the Treasury, the official vested with rulemaking and interpretive authority regarding the anti-alienation provision, has promulgated a regulation (26 C.F.R. 1.401(a)-13) interpreting that provision to preclude garnishment of petitioner's pension accounts under the facts of this case. Since the decision below is inconsistent with that regulation, the Secretary of the Treasury has a substantial interest in this case. The Secretary of Labor also has an interest because the interpretation of ERISA's anti-alienation provision implicates basic ERISA policies that may affect the Secretary's enforcement of the Act. 29 U.S.C. 1132(a) and (b). The Secretary of Labor also has significant responsibilities for enforcing the LMRDA; she conducts investigations (29 U.S.C. 521) and oversees litigation involving the reporting and disclosure requirements (29 U.S.C. 440), trusteeships (29 U.S.C. 464), union elections (29 U.S.C. 482), and criminal actions for violation of the statute's embezzlement provisions (29 U.S.C. 501(c)). Indeed, in this case, the Secretary investigated petitioner's embezzlement of union funds. In addition, the Secretary of Labor enforces the CCPA's restrictions on garnishment (15 U.S.C. 1676), and the decision below is inconsistent with a Labor Department regulation (29 C.F.R. 870.51(c)) interpreting those restrictions. In deciding this case, the court of appeals apparently did not consider either set of applicable regulations cited above. The United States has an interest in seeing that pertinent agency regulations are duly considered and properly applied by the courts. The government also has an interest in seeing that these three labor statutes are construed together to give the greatest possible effect to the protective purposes underlying each. The United States previously filed a brief in this case at the Court's invitation urging that the petition for a writ of certiorari be granted. STATEMENT 1. Petitioner Curtis Guidry was formerly employed as the chief executive officer, business manager, and financial secretary-treasurer of respondent Sheet Metal Workers International Association, Local No. 9 (the Union). He also served as a trustee of the Union's local pension and welfare plans. In 1982, petitioner pleaded guilty to violating the Labor-Management Reporting and Disclosure Act of 1959 (LMRDA), 29 U.S.C. 501(c), by embezzling over $377,000 from the Union. As the Union's chief financial officer, petitioner was able to use several methods to embezzle from the Union. For example, he transferred money from the Union's checking account to his own account and made unauthorized cash withdrawals from the Union's savings account for his personal use. In addition, he deposited into his personal account checks payable to the Union, including checks received by the Union from the pension and welfare plans for administrative services. Petitioner was charged with, and convicted of, embezzling from the Union only. There was no allegation that he had stolen from the pension or welfare plans. Pet. App. A2-A3, B2, C8-C10; U.S. App. 1a-2a. /1/ After serving a prison term and resigning from his employment with the Union, petitioner applied for early retirement benefits from the three respondent pension plans. When two of the plans refused to pay, he brought this action against those two plans under the Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. 1132(a)(1)(B), to enforce his right to accrued and future pension benefits. While not disputing that petitioner was otherwise entitled to benefits, the plans contended that he had forfeited his eligibility by his misconduct. The Union intervened, joined the third pension plan as a party, and asserted six claims against petitioner. The first claim alleged breaches of petitioner's fiduciary duties to the Union in violation of Section 501(a) of the LMRDA, 29 U.S.C. 501(a), while the second through fifth claims essentially restated the first claim under various state common law theories. The sixth claim asked the court to impose a constructive trust on petitioner's pension benefits in favor of the Union, and to enjoin the plans from paying any further benefits to petitioner until the Union was made whole for its losses. Petitioner and the Union stipulated to the entry of a $275,000 judgment on the Union's first five claims, while agreeing to litigate the availability of the constructive trust remedy. The plans that had denied benefits continued to argue that petitioner had totally forfeited his right to those benefits, but asserted in the alternative that, if pension benefits were owed, the Union should receive them. Pet. App. A3, B2; U.S. App. 3a-9a. 2. The district court held that petitioner had not forfeited his pension benefits. It relied on several cases interpreting ERISA's anti-forfeiture provision (Section 203(a), 29 U.S.C. 1053(a) (1982 & Supp. V 1987)) /2/ to preclude forfeiture of pension benefits because of employee misconduct, even where that misconduct amounted to criminal fraud against the employer. /3/ However, the court imposed a constructive trust on petitioner's pension benefits, making them payable to the Union. Pet. App. B5. It held that ERISA does not bar imposition of such a constructive trust, despite what the court described (id. at B3) as the "unconditional" language of the statute's anti-alienation provision. Section 206(d)(1), 29 U.S.C. 1056(d)(1). /4/ The court observed that Congress had recently enacted an exception to the anti-alienation provision for "qualified domestic relations order(s)" after courts "had found an implied exception" for that purpose in cases such as AT&T v. Merry, 592 F.2d 118 (2d Cir. 1979). Pet. App. B3-B4. The district court also noted that two circuits had reached contrary conclusions on the question whether to infer an exception to the anti-alienation provision in cases involving criminal misconduct or fraud. Pet. App. B4, citing Ellis National Bank v. Irving Trust Co., 786 F.2d 466 (2d Cir. 1986) (no exception), and St. Paul Fire & Marine Ins. Co. v. Cox, 752 F.2d 550 (11th Cir. 1985) (exception implied). However, the court did not consider this case to be entirely comparable to either Ellis National Bank or St. Paul Fire & Marine because, unlike those cases, here the "question is not whether particular state law is preempted by ERISA," but instead is "how to interpret the nonalienability provision's effect on other federal statutes." Pet. App. B4. In particular, the court believed that ERISA should be read "in pari materia" with the Labor-Management Relations Act of 1947, Tit. II, 29 U.S.C. 171 et seq., and the LMRDA, whose purposes are to protect workers against "corrupt practices on the part of union officers." Pet. App. B4. Considering the protective purposes of all three statutes, the court concluded that "(i)n 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." Id. at B5. Therefore, the court granted the constructive trust remedy sought by the Union. Ibid. /5/ 3. The court of appeals affirmed, concluding that the district court properly used its "inherent equitable authority" to impose a constructive trust "to redress breaches of ERISA" and to recover "money embezzled by (petitioner) from the pension fund." Pet. App. A2, A4, A5. In the court's view, ERISA's anti-alienation provision is subject to an implied exception for fraud, an exception the court defined as a "narrow" one "applicable only to a trustee-beneficiary (of a pension fund) who has directly or indirectly damaged the fund through his fraudulent actions." Id. at A12 n.3. The court relied largely on decision of the District of Columbia and Eleventh Circuits in Crawford v. La Boucherie Bernard Ltd., 815 F.2d 117 (D.C. Cir.), cert. denied, 108 S. Ct. 328 (1987), and St. Paul Fire & Marine, which it described as authorizing a court to "garnish a beneficial interest in a plan to satisfy a judgment based on a breach of ERISA." Pet. App. A4. It declined to follow the holdings of the Sixth and Second Circuits in United Metal Products Corp. v. National Bank, 811 F.2d 297 (6th Cir. 1987), cert. dismissed, 108 S. Ct. 1494 (1988), and Ellis National Bank, which refused to imply a criminal misconduct exception to ERISA's anti-alienation provision. Pet. App. A5. Emphasizing both the importance of fiduciary responsibility and the broad scope of the remedies provided in ERISA's enforcement provisions, the court of appeal found "no indication in (ERISA) that the unscrupulous fiduciary is to be protected from the natural legal consequences of his or her misdeeds." Pet. App. A5. According to the court, "(w)hen (petitioner) left office after embezzling at least $370,000, the Union had only $150,000 in cash assets remaining, and the financial security of workers who relied upon the Union's pension plan was severely undermined." Ibid. Under these circumstances, the court concluded that imposing a constructive trust on petitioner's pension benefits "both accorded with (established) principles of trust law and was well within its discretionary power as defined by the common law and ERISA." Id. at A7. /6/ Finally, the court of appeals rejected peitioner's effort to exempt 75 percent of his pension benefits from garnishment under the Consumer Credit Protection Act, 15 U.S.C. 1671 et seq. (CCPA). The court recognized that the CCPA's definitions of "earnings" and "garnishment" (15 U.S.C. 1672(a) and (c), respectively) encompass periodic pension payments subjected to a constructive trust. /7/ However, it declined to reach the issue on the ground that petitioner had not filed a timely objection to the writ of garnishment as required by governing state law. Pet. App. A10-A11. The court cited Mackey v. Lanier Collection Agency & Service, Inc., 108 S. Ct. 2182 (1988), for the proposition that state garnishment laws are not preempted by ERISA, but did not address the question whether such laws might be preempted by the CCPA. Pet. App. A13 n.7. SUMMARY OF ARGUMENT I. ERISA's anti-alienation provision states that pension benefits "may not be assigned or alienated." Section 206(d)(1), 29 U.S.C. 1056(d)(1). The statute provides only two exceptions: one for voluntary and revocable assignments of ten percent or less of a benefit payment and the other for involuntary assignments to enforce "qualified domestic relations order(s)." Section 206(d)(2) and (3), 29 U.S.C. 1056(d)(2) and (3) (1982 & Supp. V 1987). In line with the language of the statute, the applicable regulation prohibits any other "attachment, garnishment, levy, execution or other legal or equitable process." 26 C.F.R. 1.401(a)-13(b)(1). Thus, unless an additional exception is to be inferred, the courts below erred by ordering the pension plans to pay petitioner's benefits to his former employer. No criminal misconduct exception should be inferred to allow employers to recoup losses by tapping an employee's pension account. First, the statute and interpretive regulations do not provide for such an exception. Second, other provisions in ERISA reinforce the conclusion that, despite its equitable appeal, such an exception would be contrary to Congress's intention to ensure that employees (and their families, who are not normally responsible for employee misconduct) actually receive the pension benefits they have been promised. Specifically, the statute provides that pension plan assets must be used only to provide benefits and to pay reasonable administrative costs (Section 404(a)(1)(A), 29 U.S.C. 1104(a)(1)(A)), and further provides that pension benefits must vest according to a schedule set out in the statute and that vested benefits are not forfeitable (Section 203(a), 29 U.S.C. 1053(a)). Third, the statute also states that pension plan assets "shall never inure to the benefit of any employer." Section 403(c)(1), 29 U.S.C. 1103(c)(1). Thus, Congress has made especially clear that employers may not invade their employees' pension accounts. Nor is recovery by petitioner's former employer warranted, under the facts of this case, on the ground that a fiduciary has breached his duties to a pension plan in violation of Section 409(a) of ERISA, 29 U.S.C. 1109(a). Whatever the merits of such an exception, it would not apply here because petitioner did not embezzle from the pension plans, but instead stole from his employer. That is made plain by the fact that the constructive trust has been imposed for the benefit of the Union, not the pension plans. Finally, the remedial provision of the Labor-Management Reporting and Disclosure Act should not be construed to override ERISA's anti-alienation clause. It is true that the LMRDA's authorization of "other appropriate relief" (29 U.S.C. 501(b)) for a union officer's breach of duty might be construed to allow garnishment of the officer's pension account and that such a remedy would further the LMRDA's purpose of protecting union members from malfeasance by union officials. However, the LMRDA does not explicitly authorize invasions of employees' pension accounts, and no court has interpreted the LMRDA to provide for such a remedy. It is therefore appropriate that the subsequently enacted, specific anti-alienation provision of ERISA should take precedence over the more general authorization of "other" relief in the LMRDA. II. If this Court reverses the court below on the first question presented, it need not reach the second question, which is whether petitioner waived his right under the Consumer Credit Protection Act to shield 75 percent of his periodic pension benefits from garnishment. If the second question is reached, the Court should reverse the holding of the court of appeals. The CCPA's garnishment restriction is phrased as a limitation on the power of the courts: the statute provides that no court "may make, execute, or enforce any order or process in violation of this section." 15 U.S.C. 1673(c). Accordingly, as the Department of Labor has concluded in the applicable interpretive regulation (29 C.F.R. 870.51(c)), the restriction is not subject to waiver. Rather, it is self-executing. ARGUMENT I. ERISA'S ANTI-ALIENATION PROVISION BARS IMPOSITION A CONSTRUCTIVE TRUST ON THE PENSION BENEFITS OF A FORMER UNION OFFICER WHO EMBEZZLED UNION FUNDS A. ERISA's Anti-Alienation Provision Prohibits Garnishment of Pension Benefits Under ERISA's anti-alienation provision, "Each pension plan shall provide that benefits provided under the plan may not be assigned or alienated." Section 206(d)(1), 29 U.S.C. 1056(d)(1). This provision was intended to "ensure that the employee's accrued benefits are actually available for retirement purposes." H.R. Rep. No. 807, 93d Cong., 2d Sess. 68 (1974), reprinted in 2 Senate Comm. on Labor and Public Welfare, 94th Cong., 2d Sess., Legislative History of the Employee Retirement Income Security Act of 1974, at 3188 (Comm. Print 1976) (hereafter "Leg. Hist."). The statute permits "any voluntary and revocable assignment of not to exceed 10 percent of any benefit payment." Section 206(d)(2), 29 U.S.C. 1056(d)(2). The legislative history confirms the unsurprising conclusion that garnishments are to be viewed as involuntary assignments, and thus do not come within that limited exception. /8/ The statute authorizes involuntary assignments only to enforce "qualified domestic relations order(s)," i.e., orders relating to such matters as child support and alimony payments. Section 206(d)(3), 29 U.S.C. 1056(d)(3) (Supp. V 1987). Consistent with the statutory language and the legislative history, a regulation promulgated by the Treasury Department in 1978 interprets the anti-alienation provision to prohibit involuntary alienation, including garnishment, for other purposes. /9/ The regulation states that "benefits provided under (a qualified) plan may not be anticipated, assigned (either at law or in equity), alienated or subject to attachment, garnishment, levy, execution or other legal or equitable process." 26 C.F.R. 1.401(a)-13(b)(1). The overwhelming majority of courts have agreed that ERISA precludes garnishment of pension benefits by general creditors of plan participants. /10/ Those courts have reasoned that the anti-alienation provision insulates pension plan benefits from garnishment in order to ensure that plan participants and their dependents actually receive their pension benefits. /11/ In Mackey v. Lanier Collection Agency & Service, Inc., 108 S. Ct. 2182 (1988), holding that welfare benefits (such as vacation benefits) are subject to garnishment, the Court contrasted ERISA's treatment of welfare benefits with its treatment of pension benefits. The Court reasoned that Section 206(d)(1) showed that Congress knew how to prevent garnishment of employee benefit plans and that it had chosen to prohibit garnishment of pension benefits only. 108 S. Ct. at 2188-2189. Thus, this Court read the anti-alienation provision as barring garnishment of pension accounts. The constructive trust remedy imposed by the district court is essentially a garnishment. Under the Consumer Credit Protection Act, which defines "earnings" to include pension benefits (15 U.S.C. 1672(a)), "garnishment" is defined as "any legal or equitable procedure through which the earnings of any individual are required to be withheld for payment of any debt" (15 U.S.C. 1672(c)). There is no reason to apply any narrower definition under ERISA. Accordingly, the court's order directing the pension plans to pay petitioner's pension benefits to his former employer is contrary to the anti-alienation provision, which is aimed at protecting pension benefits from seizure by persons other than participants and beneficiaries. No applicable exception authorizes such payment. B. This Court Should Not Infer a General Criminal Misconduct Exception to ERISA's Anti-Alienation Clause for the Benefit of Employers In St. Paul Fire & Marine Ins. Co. v. Cox, 752 F.2d 550 (1985), the Eleventh Circuit recognized that the anti-alienation provision prohibits general creditors from garnishing pension accounts. 752 F.2d at 551. However, relying on the "equitable principle that a wrongdoer should not benefit from his misdeeds," the court held that "garnishment undertaken to satisfy liabilities arising from criminal misconduct toward an employer constitutes an exception to the non-alienability provisions of ERISA." Id. at 552. Both the Second Circuit in Ellis National Bank v. Irving Trust Co., 786 F.2d 466, 471 (1986), and the Sixth Circuit in United Metal Products Corp. v. National Bank, 811 F.2d 297, 299-300 (1987), cert. dismissed, 108 S. Ct. 1494 (1988), have expressly rejected the Eleventh Circuit's approach. In our view, the Second and Sixth Circuits correctly refused to infer a criminal misconduct exception. As an initial matter, "whether an exception should be created is a question for legislative rather than judicial judgment" (United Metal Products, 811 F.2d at 300; accord Ellis National Bank, 786 F.2d at 472), and Congress has created no such exception. Since it enacted ERISA in 1974, Congress has added only one exception to ERISA's anti-alienation provision, the limited exception for "qualified domestic relations order(s)" contained in the Retirement Equity Act of 1984, Pub. L. No. 98-397, Sections 104(a), 104(b), 204(a), 98 Stat. 1433, 1436, 1445 (codified at 29 U.S.C. 1056(d)(3), 1144(b)(7) (Supp. V 1987), 26 U.S.C. 401(a)(13)(B) (Supp. V 1987)). /12/ In "carving out an appropriate and well-defined exception for domestic relations orders meeting specific standards" (130 Cong. Rec. 23,481 (1984) (remarks of Rep. Erlenborn)), Congress reaffirmed its intent to make no other changes in the anti-alienation or preemption provisions of ERISA. Ibid.; see also H.R. Rep. No. 655, 98th Cong., 2d Sess. Pt. 1, at 39, 42 (1984). Moreover, "(d)espite its equitable appeal, (a) 'criminal misconduct' exception * * * undermines a fundamental purpose of ERISA * * * that 'if a worker has been promised a defined pension benefit upon retirement * * * he actually receives it.'" Ellis National Bank, 786 F.2d at 471, quoting Alessi v. Raybestos-Manhattan, Inc., 451 U.S. 504, 510 (1981); accord United Metal Products, 811 F.2d at 300. That objective is codified in the statutory provision requiring that plan assets be held "for the exclusive purposes of * * * providing benefits to participants in the plan and their beneficiaries * * * and defraying reasonable expenses of administering the plan." 29 U.S.C. 1104(a)(1)(A). In addition, to ensure that employees actually receive the pension benefits they were promised, ERISA includes detailed provisions for vesting and nonforfeitability of pension rights, "concepts * * * critical to the ERISA scheme." Alessi, 451 U.S. at 510. For example, Section 203(a), 29 U.S.C. 1053(a) (1982 & Supp. V 1987), the anti-forfeiture provision, directs each pension plan to "provide that an employee's right to his normal retirement benefit is nonforfeitable upon the attainment of normal retirement age" and requires pre-retirement vesting of accrued benefits according to a prescribed schedule. Except as specifically provided by the statute itself, "an employee's rights, once vested, are not to be forfeitable for any reason." H.R. Conf. Rep. No. 1280, 93d Cong., 2d Sess. 271 (1974); reprinted in 3 Leg. Hist. 4538. This general prohibition against forfeiture of vested pension benefits was aimed directly at outlawing so-called "bad boy" clauses that denied benefits "because the employee later went to work for a competitor, or in some other way was considered 'disloyal' to the employer." H.R. Rep. No. 807, 93d Cong., 2d Sess. 60 (1974), reprinted in 2 Leg. Hist. 3180; see also 120 Cong. Rec. 29,197 (1974) (remarks of Rep. Dent), reprinted in 3 Leg. Hist. 4669. The drafters therefore intended to prevent the cancellation of retirement benefits as a method of punishing employees for real or imagined offenses, including theft or fraud. See Fremont v. McGraw-Edison Co., 606 F.2d 752 (7th Cir. 1979), cert. denied, 445 U.S. 951 (1980); Winer v. Edison Bros. Stores Pension Plan, 593 F.2d 307 (8th Cir. 1979); Vink v. SHV N. Am. Holding Corp., 549 F. Supp. 268 (S.D. N.Y. 1982). /13/ ERISA further safeguards pension benefits by directing that "the assets of a plan shall never inure to the benefit of any employer." 29 U.S.C. 1103(c)(1). The regulations accordingly define a prohibited "assignment" or "alienation" to include "(a)ny arrangement providing for the payment to the employer of plan benefits which otherwise would be due the participant under the plan." 26 C.F.R. 1.401(a)-(13)(c)(1)(i) (emphasis added). To prevent employers from profiting from the assets of employee benefit plans, the statute also imposes strict fiduciary duties on plan trustees and prohibits entire categories of financial transactions between plans and parties in interest, defined to include both employers and unions. 29 U.S.C. 1002(14)(C) and (D), 1106. As this Court has emphasized, the purpose of these ERISA provisions is "specifically (to) insulate the trust from the employer's interest." NLRB v. Amax Coal Co., 453 U.S. 322, 333 (1981). Thus, nothing in the language or legislative history of ERISA places an employer harmed by an employee's embezzlement in a better position than that of any other third-party creditor attempting to collect a debt by garnishing a pension plan account. To the contrary, an implied exception in favor of employers would also be directly contrary to provisions in ERISA other than the anti-alienation provision. Barring the diversion of pension benefits to accomplish other societal goals is fully consistent with the language of the statute and with congressional intent. ERISA was enacted primarily for "the protection of individual pension rights." H.R. Rep. No. 533, 93d Cong., 1st Sess. 1 (1973), reprinted in 2 Leg. Hist. 2348. Indeed, Congress's considered judgment was that the economic security of retirees -- and their dependents -- was paramount, even against other worthy objectives. The whole point of a provision barring involuntary alienation is to prevent third parties with legitimate claims against a person's property from collecting out of the pension assets protected by the provision. Consequently, contrary to the court's belief (Pet. App. A5), Congress did intend the anti-alienation provision "to protect() individuals such as (petitioner) from the consequences of their misconduct." /14/ See Crausman v. Curtis-Wright Corp., 676 F. Supp. 1302, 1304 (D.N.J. 1988) ("Congress did not intend to include or permit an employee misconduct exception"). The message of ERISA's anti-alienation provision, which is also reflected in other provisions of the statute, is that creditors generally, and particularly a creditor who was a partipant's employer, cannot invade a debtor's promised pension benefits. /15/ C. The Facts of This Case Do Not Warrant Recovery on the Ground That a Fiduciary Has Breached His Duty to a Pension Plan In Crawford v. La Boucherie Bernard Ltd., 815 F.2d 117, cert. denied, 108 S. Ct. 328 (1987), the District of Columbia Circuit held that, where the fiduciary of an employee benefit plan embezzled from the plan itself, the plan can recoup its losses from the fiduciary's pension account. The court found authority for that offset remedy in Section 409(a) of the Act, 29 U.S.C. 1109(a), which provides that fiduciaries "shall be personally liable to make good to such plan any losses to the plan resulting from each such breach." The court also noted that Section 502(a), 29 U.S.C. 1132(a), authorizes "appropriate equitable relief" in cases involving breaches of fiduciary duties, and that, under the law of trusts, a breaching fiduciary's share of trust property "'will be taken by the court in order to make good the loss.'" 815 F.2d at 120 (quoting G. Bogert, Trusts and Trustees Section 191, at 484 (2d ed. 1979)). The court below apparently believed that this case is comparable to Crawford. It repeatedly mischaracterized petitioner's misconduct as involving embezzlement "from the pension fund" (see, e.g., Pet. App. A2) and described the use of a constructive trust as "redress(ing) breaches of ERISA" (id. at A5; see also id. at A6, A7, A9, A11 n.3, A13 n.7). In fact, petitioner was neither prosecuted for embezzlement from an ERISA-covered pension plan (see 18 U.S.C. 664) nor subjected to a civil suit under ERISA in his capacity as a plan trustee for any breaches of his ERISA fiduciary duties (see 29 U.S.C. 1104, 1106, 1132 (1982 & Supp. V 1987)). Indeed, none of the plans involved in this litigation suffered any actual losses as a result of petitioner's actions. /16/ Instead, petitioner was prosecuted for -- and pleaded guilty to -- a criminal violation of the Labor-Management Reporting and Disclosure Act for embezzlement from the Union. 29 U.S.C. 501(c); Pet. App. B2; U.S. App. 1a-2a. Moreover, the Union obtained the civil judgment debt that it seeks to enforce through the constructive trust in an LMRDA action against petitioner for breaching his fiduciary duties as a union officer. Pet. App. B2. And the district court ordered the pension plan trustees to pay petitioner's benefits to the Union, not the plans themselves. Since petitioner embezzled from the Union, not the plans, the constructive trust was imposed to remedy a violation of the LMRDA, not (as the Tenth Circuit erroneously assumed) a violation of ERISA. /17/ In short, this case is similar in all its material facts to United Metal Products, Ellis National Bank, and St. Paul Fire & Marine, where employers sought to garnish former employees' pension plan benefits to recover losses resulting from embezzlement or fraud against the employer. /18/ It is not comparable to Crawford because petitioner did not embezzle from the pension plans he administered. /19/ Since, as we have shown (pp. 13-17, supra), a general criminal misconduct exception should not be implied in favor of employers, the facts of this case do not support a constructive trust remedy in favor of the Union. D. The Remedial Provision of the Labor-Management Reporting and Disclosure Act Does Not Override ERISA's Anti-Alienation Clause As the district court correctly observed (Pet. App. B4-B5), this case differs from the prior employer garnishment cases in one respect -- the judgment debt arose not under state law but under federal law (the Labor-Management Reporting and Disclosure Act). Since ERISA preserves all other laws of the United States (29 U.S.C. 1144(d); /20/ see Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 100-101 (1983)), it is necessary to consider whether, despite the strong policy underlying ERISA's anti-alienation provision, anything in the LMRDA should be construed as authorizing the attachment of an unfaithful union officer's pension benefits. Although this question is not without difficulty, we believe that the fact that the judgment debt arose under the LMRDA should not affect the result. The LMRDA was designed to establish "high standards of responsibility and ethical conduct" for union officials. 29 U.S.C. 401(b). Accordingly, Section 501(a) of that Act declares that officers of a labor organization "occupy positions of trust in relation to such organization and its members as a group" and therefore have a duty "to hold its money and property solely for the benefit of the organization and its members." 29 U.S.C. 501(a). These fiduciary duties are enforceable through a private right of action by the union or any member thereof "to recover damages or secure an accounting or other appropriate relief for the benefit of the labor organization." 29 U.S.C. 501(b). A separate criminal provision forbids embezzlement from a union. 29 U.S.C. 501(c). Although the district court did not specifically refer to Section 501(b) of the LMRDA as a basis for its imposition of a constructive trust, that section's authorization of "other appropriate relief" is a possible statutory source -- indeed the only possible source -- for such a remedy in this case. The courts have read Section 501(b) to authorize "a wide array of remedies for fiduciary breaches," including damages, accounting, injunctions, surcharge, and restitution. Morrissey v. Curran, 650 F.2d 1267, 1281 (2d Cir. 1981). /21/ In particular, two courts of appeals have enjoined unions from making any salary or other payments to culpable union officers until they satisfied their judgment debts to the unions for violating the LMRDA. Local No. 92, Int'l Ass'n of Bridge Workers v. Norris, 383 F.2d 735 (5th Cir. 1967); Highway Truck Drivers & Helpers v. Cohen, 334 F.2d 378 (3d Cir.), cert. denied, 379 U.S. 921 (1964). The latter court explained its action as "'merely an injunction in aid of a judgment creditor to set off claims owed it by the judgment debtor.'" 334 F.2d at 381 (citation omitted). Yet neither the statutory language, the legislative history, nor any case under Section 501 of the LMRDA of which we are aware specifically authorizes imposing a constructive trust on the pension benefits of a union officer to recover the latter's judgment debt to a union. /22/ On the contrary, one pre-ERISA court refused to permit a union to collect a judgment debt under Section 501 of the LMRDA by attaching the pension benefits of the defendant union officers, holding such a remedy barred by the spendthrift (anti-alienation) provision of the pension trust agreement. United Mine Workers of America v. Boyle, 567 F.2d 112 (D.C. Cir. 1977), cert. denied, 435 U.S. 956 (1978). In reaching that decision, the court emphasized that the pension trust is "an independent entity, not part of the (union)," and expressly rejected the view of the dissenting judge that application of the spendthrift provision would be inconsistent with the public policy stated in Section 501 of the LMRDA. 567 F.2d at 113-114. Thus, in providing remedies under the fiduciary provisions of the LMRDA, the courts of appeals have distinguished offsets between a judgment creditor (the union) and a judgment debtor (the union officer) from third-party garnishments in which a pension plan, an outsider to the LMRDA dispute, is asked to divert payments from their intended beneficiary to the union. The former are permissible; the latter are not. Compare Local 92 and Highway Truck Drivers (offset) with Boyle (garnishment). ERISA's anti-alienation provision now mandates that all pension plans have the type of spendthrift clause upheld by the District of Columbia Circuit in Boyle, adding a strong congressional endorsement to the need for such protection of pension rights. We recognize, of course, that permitting a constructive trust in this case would further the general protective purposes of the LMRDA. /23/ But it would also undermine the more specific protective purpose of ERISA's anti-alienation provision. Petitioner's substantive right under that provision is firmly grounded in specific statutory language, while the Union's claim to a constructive trust is grounded at best on general equitable principles implied from the LMRDA's catch-all authorization of "other appropriate relief" in Section 501(b). Reading these provisions together in accordance with sound principles of statutory construction, the specific should control the general, so that petitioner's right to receive his pension benefits is preserved. See Radzanower v. Touche Ross & Co., 426 U.S. 148, 153 (1976); Morton v. Mancari, 417 U.S. 535, 550-551 (1974). Further tipping the scales in favor of ERISA are the history and timing of that statute. The Congress that enacted ERISA was well aware of the existence (and limitations) of the LMRDA and other federal labor statutes then regulating various aspects of pension and welfare plans. See S. Rep. No. 127, 93d Cong., 1st Sess. 3 (1973), reprinted in 1 Leg. Hist. 589. Had it wished, Congress could have created exceptions to ERISA's anti-alienation and anti-forfeiture provisions to permit garnishment of pension benefits to satisfy LMRDA judgment debts. However, Congress did not do so, and nothing in ERISA (or its legislative history) suggests that it would approve the judicial gloss added to the anti-alienation provision by the court of appeals. To the contrary, Congress specifically intended to insulate pension benefits from interference by all employers. Amax Coal, 453 U.S. at 333. On balance, then, we believe the better view of the two federal statutes is that ERISA's anti-alienation provision precludes the use of pension benefits to satisfy an LMRDA judgment debt. II. IF ERISA DOES NOT BAR THE CONSTRUCTIVE TRUST, THE CONSUMER CREDIT PROTECTION ACT PROTECTS 75 PERCENT OF PETITIONER'S MONTHLY PENSION BENEFITS If this Court concludes, contrary to our submission, that ERISA's anti-alienation clause does not protect petitioner's pension benefits in their entirety, it must decide whether the Consumer Credit Protection Act, 15 U.S.C. 1671-1677, shields 75 percent of his periodic pension benefit payments from garnishment. The court of appeals held that petitioner had waived his right to invoke the CCPA by failing to file a timely objection to the writ of garnishment as required by Colorado law. Pet. App. A10-A11. That holding was in error. Under the CCPA, the maximum amount of an individual's "earnings" that may be subjected to "garnishment" may not exceed "25 per centum of his disposable earnings for that week." 15 U.S.C. 1673(a)(1). /24/ "Earnings" are defined to include "periodic payments pursuant to a pension or retirement program" (15 U.S.C. 1672(a)) and "garnishment" is defined broadly as "any legal or equitable procedure through which the earnings of any individual are required to be withheld for payment of any debt" (15 U.S.C. 1672(c)). As recognized by the court below, these definitions by their terms "encompass the constructive trust levied in the instant case." Pet. App. A10. See also Ward v. Ward, 164 N.J. Super. 354, 363, 396 A.2d 365, 370 (1978) (pension benefits are "earnings" under CCPA); Villano v. Villano, 98 Misc. 2d 774, 783, 414 N.Y.S. 2d 625, 632 (Sup. Ct. 1979) (same); Samples v. Samples, 414 F. Supp. 773, 774 (W.D. Okla. 1976) (same). As discussed above (note 23, supra), the LMRDA preserves the rights of union members under other federal statutes. 29 U.S.C. 523(a). The CCPA's restriction on garnishment, as part of a more specific and later-enacted federal statute, is properly read as a limitation on the more general remedial provisions of the LMRDA. See pp. 23-24, supra. Therefore, even if this Court were to hold that the constructive trust imposed in this case is generally authorized by the LMRDA, it should nevertheless conclude that the terms of the trust improperly exceed the CCPA's limitation of garnishment to 25 percent of petitioner's monthly pension benefits. The court below refused to apply the CCPA's garnishment restriction because it believed that petitioner had waived his right by failing to comply with state garnishment law. That conclusion is incorrect because the CCPA phrases its restriction on garnishment as a mandatory limitation on the power of the courts. The CCPA provides: "No court of the United States or any State * * * may make, execute, or enforce any order or process in violation of this section." 15 U.S.C. 1673(c). /25/ Since the statute prohibits the entry of orders providing for garnishment in excess of 25 percent of a person's earnings, other state and federal courts have held that the percentage limitation in Section 1673(a) is "self-executing," and thus, regardless of state law, need not be timely and personally demanded by the debtor. Donovan v. Hamilton County Municipal Court, 580 F. Supp. 554, 556-557 (S.D. Ohio 1984); Dyche v. Dyche, 570 S.W.2d 293, 295 (Mo. 1978). Those courts thus agree with a regulation issued by the Secretary of Labor, the official authorized to enforce the CCPA garnishment provisions (15 U.S.C. 1676), interpreting the statute as "not requiring the raising of the (15 U.S.C.1673)(a) restrictions as affirmative defenses in garnishment proceedings." 29 C.F.R. 870.51(c). See Donovan v. Hamilton County, 580 F. Supp. at 557 (affording deference to the Department of Labor's regulatory interpretation). In sum, the decision below directly contravenes Section 1673(c) of the CCPA, as interpreted by the Secretary of Labor and prior court decisions. Apparently the courts and the parties below simply overlooked the plain language of Section 1673(c), as well as the authoritative regulatory and judicial interpretations of its preemptive effect, and thus the court erroneously dismissed petitioner's CCPA claim. CONCLUSION The judgment of the court of appeals should be reversed. Respectfully submitted. KENNETH W. STARR Solicitor General DAVID L. SHAPIRO Deputy Solicitor General CHRISTOPHER J. WRIGHT Assistant to the Solicitor General ROBERT P. DAVIS Solicitor of Labor ALLEN H. FELDMAN Associate Solicitor MARY-HELEN MAUTNER Counsel for Appellate Litigation ELLEN L. BEARD Attorney AUGUST 1989 /1/ "U.S. App." refers to the appendix to the brief previously submitted by the federal government in this case in response to the Court's invitation to the Solicitor General to express the views of the United States. /2/ Section 203(a) states that "(e)ach pension plan shall provide that an employee's right to his normal retirement benefit is nonforfeitable upon the attainment of normal retirement age." It further provides that an employee's own contributions to a plan are at all times nonforfeitable and that employers' contributions must become nonforfeitable according to a vesting schedule set out in the statute. See also 26 U.S.C. 411(a) (1982 & Supp. V 1987). /3/ Pet. App. B3, citing Fremont v. McGraw-Edison Co., 606 F.2d 752 (7th Cir. 1979), cert. denied, 445 U.S. 951 (1980); Winer v. Edison Bros. Stores Pension Plan, 593 F.2d 307 (8th Cir. 1979); Vink v. SHV N. Am. Holding Corp., 549 F. Supp. 268 (S.D. N.Y. 1982). /4/ Section 206(d)(1) states that "(e)ach pension plan shall provide that benefits provided under the plan may not be assigned or alienated." See also 26 U.S.C. 401(a)(13)(A) (1982 & Supp. V 1987). /5/ Although no mention of the issue was made in the court's opinion, the hearing transcript shows the court's belief that, by imposing a constructive trust rather than a "garnishment," it could avoid any exemption issues that might arise under the Consumer Credit Protection Act. Pet. App. C22. /6/ The court also rejected petitioner's argument that a constructive trust could be imposed only on embezzled funds that could be traced back into the pension plan. Pet. App. A7-A9. That issue was not presented in the petition for a writ of certiorari. /7/ Section 1672(a) defines "earnings" to include "periodic payments pursuant to a pension or retirement program." Section 1672(c) defines "garnishment" as "any legal or equitable procedure through which the earnings of any individual are required to be withheld for payment of any debt." /8/ The Conference Report notes that, "(f)or purposes of this rule, a garnishment or levy is not to be considered a voluntary assignment." H.R. Conf. Rep. No. 1280, 93d Cong., 2d Sess. 280 (1974), reprinted in 3 Leg. Hist. 4547. /9/ All rulemaking and interpretive authority with respect to ERISA's minimum funding, participation, and vesting standards for employee benefit plans is consolidated in the Secretary of the Treasury (in practice, the Internal Revenue Service (IRS)). Reorg. Plan No. 4 of 1978, Section 101(a), 3 C.F.R. 332 (1979). The Secretary of Labor, however, retains authority under Section 502 of ERISA, 29 U.S.C. 1132 (1982 & Supp. V 1987), to bring civil actions to enforce fiduciary obligations under such plans consistent with the IRS's interpretation of those standards. Reorg. Plan No. 4 of 1978, Section 104, 3 C.F.R. 333 (1979). Thus, both agencies have responsibility for enforcement of the anti-alienation provision. /10/ See, e.g., Tenneco, Inc. v. First Virginia Bank, 698 F.2d 688, 689-690 (4th Cir. 1983); General Motors Corp. v. Buha, 623 F.2d 455, 460-463 (6th Cir. 1980); Commercial Mortgage Ins., Inc. v. Citizens National Bank, 526 F. Supp. 510, 516-520 (N.D. Tex. 1981); Christ Hospital v. Greenwald, 82 Ill. App. 3d 1024, 1027-1028, 403 N.E.2d 700, 703-704 (1980); Helmsley-Spear, Inc. v. Winter, 74 A.D.2d 195, 199, 426 N.Y.S.2d 778, 781 (1980), aff'd, 52 N.Y.2d 984, 419 N.E.2d 1078, 438 N.Y.S.2d 79 (1981). /11/ The court below recently held that the Federal Deposit Insurance Corporation (FDIC), acting as the receiver of a failed bank, was in no better position than any other commercial creditor to garnish a debtor's pension account. FDIC v. Farha, No. 87-1530 (10th Cir. June 13, 1989). In concluding that ERISA's anti-alienation provision precludes such a garnishment, the Tenth Circuit specifically deferred (slip op. 6-7) to the Treasury regulation, which it failed to mention in the present case. In distinguishing its decision here, the court reiterated its view that this case involved embezzlement of pension plan funds. Id. at 8 n.2. That belief is erroneous. See pp 17-20, infra. /12/ That amendment was in response to a series of cases in which the courts had recognized an implied exception to the anti-alienation provision to permit garnishment of pension benefits to satisfy spousal and child support and community property obligations contained in the orders of state domestic relations courts. S. Rep. No. 575, 98th Cong., 2d Sess. 18-19 (1984). The exception was grounded in ERISA's stated purpose "to provide protection for employees and their families." Tenneco, Inc., 698 F.2d at 690 (emphasis added); see 29 U.S.C. 1001(a) ("Congress finds * * * that the continued well-being and security of millions of employees and their dependents are directly affected by these plans") (emphasis added). Employers and other creditors, of course, cannot claim the same equitable interest in pension benefits as a participant's spouse and children. Nor, unlike family members, are they part of the class ERISA expressly was designed to protect. See, e.g., Ellis National Bank, 786 F.2d at 470-471 and cases discussed therein. /13/ Relying on this authority, the district court below properly rejected the plans' argument that petitioner had forfeited his pension benefits by his criminal misconduct. Pet. App. B3. /14/ Congress also intended to protect employees' dependents, who ordinarily bear no responsibility for the employee's misconduct. See 29 U.S.C. 1001(a); Vink, 549 F. Supp. at 271. /15/ For purposes of the anti-alienation provision of ERISA, it is immaterial that a union happened to be petitioner's employer as well as a sponsor of and contributor to the pension plan. The further contention -- that since this case involves theft from a union by a union officer, the case is governed by the Labor-Management Reporting and Disclosure Act -- is considered in Point I(D), below. /16/ Part of the $377,000 petitioner admitted to embezzling from the Union originated from the employee benefit plans, as payments from the plans to the Union for administrative services. But when petitioner converted this money to his personal use, it had already been paid to the Union and belonged to the Union. The parties agreed that the plans suffered no losses as a result of petitioner's embezzlement. The Union's attorney told the district court that "(w)e are the ones who lost the money" (Pet. App. C13), and the pension plans' attorney agreed with the district court that "the victim here in terms of whose money got taken is the union" (id. at C10). Also, even if petitioner could have been prosecuted or sued for breaching his duties to the plans, he was not, and this case must be decided on its actual facts. /17/ At one point, the court below, apparently recognizing that the pension plan had suffered no direct loss, suggested that the pension plans were injured by petitioner's misconduct because the Union administered the plans and its financial security had been damaged by his embezzlement. Pet. App. A5. This theory is an especially troublesome challenge to the integrity of the anti-alienation provision. The court was surely incorrect in its view (see id. at A5, A12 n.3) that a "narrow," "easily defined" exception to the anti-alienation provision could be carved out for fraudulent actions that "directly or indirectly" damage a pension plan. Such an exception could encompass virtually any crime against an employer or union plan sponsor that might have ripple effects on the plan, e.g., by reducing the level of future contributions by the sponsor. As several courts have observed, delineating the scope of such an exception would likely require a "boundless stream of suits and disputes." Vink, 549 F. Supp. at 273; see also United Metal Products, 811 F.2d at 300; Ellis National Bank, 786 F.2d at 471. /18/ The court below mischaracterized United Metal Products, Ellis National Bank, and St. Paul Fire & Marine as involving instances where a trustee of a pension plan, who was also a plan participant, damaged the pension plan through his fraudulent actions. See Pet. App. A11-A12 n.3. In fact, however, none of those three cases involved ERISA fiduciary misconduct against pension plans. Instead, like this case, each of those cases involved an employee who stole from his or her employer. /19/ The correctness of the holding in Crawford need not be decided here since this case does not involve an ERISA breach or remedy. (The Secretary of Labor, a party in Crawford, supported the offset remedy there on the ground that ERISA authorizes broad remedies to counter breaches of fiduciary duty by trustees of employee benefit plans. See 29 U.S.C. 1109, 1132(a)(2).) /20/ Section 514(d) of ERISA, 29 U.S.C. 1144(d), provides that "(n)othing in this subchapter shall be construed to alter, amend, modify, invalidate, impair, or supersede any law of the United States (except as provided in sections 1031 and 1137(c) of this title) or any rule or regulation issued under such law." /21/ Earlier versions of Section 501(b) specifically listed injunctions and restitution among the available remedies, and there is no indication that Congress intended to exclude them by substituting the catch-all "other appropriate relief." See H.R. 4473, 86th Cong., 1st Sess. Section 201(b) (1959), reprinted in 1 NLRB, Legislative History of the Labor-Management Reporting and Disclosure Act of 1959, at 218-219 (1959); S. 1137, 86th Cong., 1st Sess. Section 403(a) (1959), reprinted in 1 NLRB, supra, at 308. /22/ This lack of specific statutory authority distinguishes collection of LMRDA judgment debts from collection of federal taxes, which is permitted by the same Treasury regulation that bars most other attachments or alienations of pension benefits. 26 C.F.R. 1.401(a)-13(b)(2). As the Internal Revenue Service explained in promulgating the regulation (43 Fed. Reg. 6942 (1978)), that exception to the general rule prohibiting garnishment of pension plans is based both on ERISA's savings clause for other federal laws, 29 U.S.C. 1144(d), and on language in the Internal Revenue Code that overrides other federal statutes. Specifically, 26 U.S.C. 6334(c) (1982 & Supp. V 1987) provides that "(n)otwithstanding any other law of the United States * * *, no property or rights to property shall be exempt from levy other than the property specifically made exempt by subsection (a)." Section 6334(a), in turn, contains ten exemptions, including an exemption for pension payments to railroad employees and military personnel (Section 6334(a)(6)), but contains no general exemption for pension funds. It is, therefore, clear that Congress intended pension plan accounts other than those listed in Section 6334(a)(6) to be subject to federal tax levies. /23/ It is significant, however, that the drafters of the LMRDA carefully specified their intent to preserve union members' rights under other federal laws from defeasance by the LMRDA. The LMRDA's savings clause, 29 U.S.C. 523(a), states that "(e)xcept as explicitly provided to the contrary, nothing in this chapter shall * * * take away any right * * * to which members of a labor organization are entitled under * * * other Federal law." Here petitioner was a union member with a right to pension benefits protected by ERISA, another federal law; and, as stated, nothing "explicitly provide(s)" that his pension benefits are subject to attachment by the Union. /24/ The statute excepts from the 25 percent limitation support orders, bankruptcy court orders in Chapter 13 proceedings, and orders to pay taxes. 15 U.S.C. 1673(b). /25/ Since the CCPA provides that no federal or state court may enter an order in violation of 15 U.S.C. 1673(a), it plainly preempts state laws allowing garnishment in excess of 25 percent of a person's earnings. The CCPA expressly provides that it does not preempt state laws "providing for more limited garnishments." 15 U.S.C. 1677(1).