The opinion of the court was delivered by: WEINFELD
This case involves the construction of the provisions of the Employee Retirement Income Security Act of 1974 ("ERISA") which prohibit the assignment or alienation of employees' pension benefits and thereby exempt such benefits from attachment or garnishment by creditors.
The issue presented is whether there exists an implied exception to these "anti-assignment or alienation" provisions with respect to orders for the support of a wife and dependent children issued by a state court pursuant to statutory authority. Defendants Rockland County (New York) and the Rockland County Support Collection Unit have obtained a state court order garnishing the pension of George Allen Cozart in order to fulfill support obligations and arrears owed to his wife, defendant Vivian Cozart. Also named as a defendant is the Family Court Judge who issued the order. Plaintiffs, members of the Pension Plan Committee created under the Pension Agreement between Clevepak Corporation and the United Paperworkers International Union (the "Pension Committee"), bring this action to enjoin the enforcement of the state court order on the ground that such enforcement would violate ERISA. Finding that ERISA's anti-assignment or alienation provisions do not preclude the execution of validly issued court orders enforcing family support rights, this Court denies the injunction and dismisses the action upon the merits.
The facts which gave rise to this case are as follows. Commencing in 1958 and over the next twenty years George Allen Cozart failed in his legal duty to support and maintain his wife and children; during that period he frequently disregarded orders of the Rockland County Family Court intended to secure compliance with that obligation, and he was constantly in arrears.
In 1965 his chronic failure to comply with the orders led to his being held in contempt of court and his commitment to jail for three days.
For the last eleven years, the support of his dependents has been borne in large measure by the community through public assistance payments made by the Rockland County Department of Social Services.
Pursuant to the Social Security Act, as amended,
the wife assigned to the Department "all the support rights (accrued, Pending and continuing)" which she had against her husband in return for "the public assistance and care received and to be received."
In January 1967, after Cozart had failed to comply with a number of orders to provide for the necessities of his family, the Family Court entered a "payroll deduction order" pursuant to New York's Family Court Act.
The order was addressed to Cozart's employer, Clevepak Corporation, directing it to withhold $ 35.00 per week from his wages and to pay those withholdings to the Family Court for the benefit of his dependents.
However, he continued to be in arrears, and by 1977 they were substantial. He retired that year and was entitled to receive a pension under the Pension Plan Agreement between Clevepak Corporation and the United Paperworkers International Union (the "Clevepak Plan"). The Social Services Department petitioned the Family Court for an order directing Cozart to pay the accumulated arrears (then estimated to be $ 5,275.80) at a rate of $ 35.00 per week. After a hearing, the Court issued a "corrected payroll deduction order" in an effort to liquidate the arrears. The order directed the Pension Committee "to withhold and deduct from the pension of (George Cozart) the sum of $ 35.00 per (week) commencing . . . forthwith and to forward the total amount so withheld . . . to Rockland County Support Collection Unit."
The Pension Committee then brought this suit to enjoin the enforcement of the state court order as an invalid assignment or alienation of pension benefits.
The essential claim, however worded, is that the pension payments to which Cozart is entitled are beyond the reach of the state court order by reason of ERISA. The Committee contends that the order is an attachment of an employee's pension benefits, in violation of ERISA's mandate that "benefits provided under the plan may not be assigned or alienated"
and contravenes the Clevepak Plan's requirement that no "assignment, pledge, or encumbrance of any kind, of pensions or deferred benefits" should be recognized.
Compliance with the order, it asserts, would constitute a breach of its fiduciary duty
and would jeopardize the Clevepak Plan's tax-exempt status under the Internal Revenue Code.
Accordingly, the Committee seeks a final judgment permanently enjoining the defendants from enforcing or attempting to enforce or otherwise implement the corrected payroll deduction order.
The defendants move pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure to dismiss the complaint for failure to state a claim upon which relief may be granted. They contend that federal jurisdiction to enter an injunction against enforcement of the state court order is barred by the Anti-Injunction Act;
further, that even if the Court has jurisdiction it should abstain on grounds of comity and federalism; and, finally, that ERISA does not prohibit the enforcement of support rights against pension benefits.
The Pension Committee submits affidavits in opposition to defendants' motion. Accordingly, the motion may be deemed one for summary judgment under Rule 56.
The parties are in accord that no genuine issue of fact exists and that the matter is ripe for summary judgment. Since the case involves a significant construction of ERISA and other applicable federal statutes, the Court invited the Department of Justice to submit an Amicus brief setting forth its views, which it did, and its counsel also participated in oral argument.
A threshold issue is whether federal jurisdiction is barred by the Anti-Injunction Act, which provides that a federal court "may not grant an injunction to stay proceedings in a State court except as expressly authorized by Act of Congress, or where necessary in aid of its jurisdiction, or to protect or effectuate its judgments."
The statute is an absolute prohibition upon the federal courts against enjoining state court proceedings, unless one of the three specifically defined exceptions applies.
The Pension Committee here contends that the Anti-Injunction Act is no bar to this action since it is "expressly authorized" by ERISA. It relies on ERISA's authorization of civil actions by "a participant, beneficiary, or fiduciary (A) to enjoin any act or practice which violates any provision of this subchapter or the terms of the plan, or (B) to obtain other appropriate equitable relief (i) to redress such violations or (ii) to enforce any provisions of this subchapter or the terms of the plan."
Such actions can be brought only in federal court.
The question is whether the foregoing provision of ERISA comes under the "expressly authorized" exception to the Anti-Injunction Act. To qualify under this exception, it is not necessary that the congressional enactment contain a specific reference to the Anti-Injunction Act, nor must it explicitly sanction injunctions against state proceedings.
The test is "whether an Act of Congress, clearly creating a federal right or remedy enforceable in a federal court of equity, could be given its intended scope only by the stay of a state court proceeding."
ERISA clearly meets the first prong of this test, for it establishes exclusive federal jurisdiction for fiduciaries to obtain injunctive relief to redress or prevent violations of its provisions.
The second prong of the test is also satisfied, since the "specific and uniquely federal right . . . could be frustrated if the federal court were not empowered to enjoin a state court proceeding."
That is, state court proceedings might be utilized to garnish pensions in violation of ERISA's anti-assignment or alienation provisions.
Unless a federal court could grant injunctive relief, enforcement of the state court order would frustrate the legislative goal of preventing the attachment of pension benefits by creditors.
Also persuasive is the Second Circuit's holding in Marshall v. Chase Manhattan Bank (National Association)
that the Anti-Injunction Act is inapplicable to a suit by the Secretary of Labor under ERISA's jurisdictional provision,
because Congress in enacting ERISA stated a strong preference that controversies be adjudicated in a federal tribunal, thereby " "eliminating the threat of conflicting and inconsistent State and local regulation.' "
By vesting federal courts with exclusive jurisdiction over suits brought under ERISA, Congress hoped that more uniform interpretation of ERISA would result.
Even though the Anti-Injunction Act does not preclude the Court from issuing the requested relief, defendants urge the Court not to exercise its power and to abstain from taking jurisdiction in this case. Federal courts may abstain in a suit to enjoin an ongoing state proceeding because of considerations of "comity and federalism."
Originally invoked to discourage litigation disrupting state criminal prosecutions,
comity and federalism may also justify federal court abstention where a party institutes a federal action challenging the validity of state court procedures in a pending state civil action, although he has the opportunity in the state court to raise the very issues presented to the federal court.
However, the present action is distinguishable from these cases.
First, the action does not involve the interruption of a pending state proceeding by the defending party. Any determination in this action will not affect the validity of the judgment of the Rockland County Family Court directing the husband to make payments for the support of his dependents; judgment had already been entered by the Family Court by the time the Pension Committee, which was not a party in the state case, brought the present action.
Thus the Pension Committee had no opportunity to present its federal claims in the state proceeding, nor is there any danger of duplicative litigation burdening the State.
Moreover, no state law or procedural practice is at issue in this suit, so that there is no reason to defer to the state courts to construe state law in the face of federal constitutional challenges.
Finally, the ERISA claim falls outside the jurisdiction and expertise of the Family Court, whose special province is domestic relations law.
Any alleged affront to the dignity of state courts would be minimal in this case and is superseded by Congress's intent to preempt state law ...