United States v. DeCay

Case: 09-30218 Document: 00511238933 Page: 1 Date Filed: 09/20/2010

IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT United States Court of Appeals

Fifth Circuit

FILED

September 20, 2010

No. 09-30218 Lyle W. Cayce

Clerk

UNITED STATES OF AMERICA,

Plaintiff - Appellee

v.

KERRY DE CAY; STANFORD BARRE,

Defendants - Appellants

LOUISIANA SHERIFFS PENSION AND RELIEF FUND,

Garnishee - Appellant

Appeals from the United States District Court

for the Eastern District of Louisiana

Before JONES, Chief Judge, and KING and HAYNES, Circuit Judges.

HAYNES, Circuit Judge:

Kerry DeCay, Stanford Barre, and the Louisiana Sheriffs Pension and

Relief Fund (“LSPRF”) appeal the district court’s order granting garnishment of

DeCay’s contributions to and Barre’s monthly benefits from state pension funds

held by the LSPRF. We conclude that the United States may garnish DeCay’s

and Barre’s retirement benefits to satisfy a criminal restitution order, but that

the United States is limited to garnishing twenty-five percent of Barre’s monthly

pension benefit. Accordingly, we REVERSE the district court’s entry of the final

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garnishment orders as to Barre, AFFIRM as to DeCay, and REMAND for

proceedings consistent with our holding.

I. Factual & Procedural Background

Kerry DeCay and Stanford Barre pleaded guilty to one count each of mail

fraud, conspiracy to commit mail fraud, and obstruction of justice for their roles

in a scheme to defraud the City of New Orleans (“the City”). At sentencing, the

district court determined that the City had suffered an injury compensable

under the Mandatory Victims Restitution Act (“MVRA”), and ordered DeCay and

Barre to pay $1,064,362.15, jointly and severally, in restitution. After judgment

was entered, the United States moved for writs of garnishment under the

Federal Debt Collection Procedures Act (“FDCPA”) seeking seizure of the

defendants’ interests in their pension funds to satisfy the restitution order. The

district court found that the statutory prerequisites to garnishment were

satisfied, see 28 U.S.C. § 3205(b), and issued the writs of garnishment to the

LSPRF.

The LSPRF answered the garnishment orders by stating that DeCay

currently was eligible only for an immediate lump-sum withdrawal of the

$77,898 he had contributed toward his retirement and that Barre was currently

receiving a monthly pension benefit of $2,464.72. The LSPRF asserted that the

pension benefits were exempt from seizure under federal and Louisiana law and

that enforcement of the writs against it as garnishee would violate the Tenth

Amendment to the United States Constitution. The LSPRF also argued that, to

the extent that garnishment is proper, the United States failed to follow the

appropriate formal procedures to withdraw DeCay’s employee contributions.

Regarding Barre, the LSPRF argued that even if garnishment were proper, the

Consumer Credit Protection Act (“CCPA”) limits the United States’ right to

garnish Barre’s pension to twenty-five percent of his monthly benefit.

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DeCay, proceeding pro se, adopted the LSPRF’s brief. Barre also objected

to the writ of garnishment against him, asserting that the Tenth Amendment

precludes the United States from garnishing his pension benefits and, in the

alternative, that the CCPA prohibits the United States from garnishing more

than twenty-five percent of his pension benefits.

The district court overruled the appellants’ objections to the garnishment

writs and held that the United States could garnish the entire amount of

DeCay’s contributions to the LSPRF ($77,898), as well as the full amount of the

monthly benefits paid by the LSPRF to Barre ($2,464.72). Accordingly, the

district court entered final orders of garnishment compelling the LSPRF to

immediately pay the United States $77,898, representing the present cash-out

value of DeCay’s employee contributions to the LSPRF, as well as 100% of any

future distributions of pension funds due to Barre. The LSPRF and Barre filed

motions for a new trial or to alter or amend the judgment. DeCay adopted the

LSPRF’s motion. The district court denied the motions.

The LSPRF, DeCay, and Barre filed the instant appeal.1 They assert that

the garnishment orders violate federal and Louisiana law, including the Tenth

Amendment to the United States Constitution. The appellants argue in the

alternative that, if garnishment is proper, the district court erred by not

requiring the United States to complete certain formalities before withdrawing

DeCay’s employee contributions and by allowing the United States to garnish

the full amount of Barre’s monthly pension benefit.

II. Standard of Review

We review a district court’s construction and application of a statute de

novo. United States v. Williams, 602 F.3d 313, 315 (5th Cir. 2010); see also

1

The LSPRF timely filed an appeal from the final orders of garnishment entered

against DeCay and Barre. Barre timely appealed the final order of garnishment entered

against him. DeCay filed a notice of appeal from the denial of his adopted motion for a new

trial or to alter or amend the judgment.

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United States v. Anderson, 559 F.3d 348, 352 (5th Cir. 2009) (stating that this

court reviews the constitutionality of a federal statute de novo). Similarly, the

“preemptive effect of a federal statute is a question of law that we review de

novo.” Franks Inv. Co. LLC v. Union Pac. R.R. Co., 593 F.3d 404, 407 (5th Cir.

2010).

III. Standing

Before we address the merits of the appellants’ arguments, we must

determine whether the LSPRF has standing to assert arguments on appeal.

United States v. Holy Land Found. for Relief & Dev., 445 F.3d 771, 779 (5th Cir.

2006) (“When standing is placed in issue in a case, the question is whether the

person whose standing is challenged is a proper party to request an adjudication

of a particular issue and not whether the issue itself is justiciable.”) (internal

quotation marks and citation omitted). The United States asserts that the

LSPRF lacks standing to object to the writs of garnishment because the LSPRF

does not have a personal interest in the retirement benefits and thus has not

suffered an injury-in-fact.

In addressing a plaintiff’s standing, the Supreme Court has required:

(1) ‘injury in fact,’ by which we mean an invasion of a legally

protected interest that is (a) concrete and particularized, and (b)

actual or imminent, not conjectural or hypothetical; (2) a causal

relationship between the injury and the challenged conduct, by

which we mean that the injury fairly can be traced to the

challenged action of the defendant, and has not resulted from the

independent action of some third party not before the court; and

(3) a likelihood that the injury will be redressed by a favorable

decision, by which we mean that the prospect of obtaining relief

from the injury as a result of the favorable ruling is not too

speculative.

Ne. Fla. Chapter of the Assoc. Gen. Contractors of Am. v. City of Jacksonville, 508

U.S. 656, 663-64 (1993) (internal citations and quotation marks omitted). The

Supreme Court further has observed that the nature and extent of the facts that

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must be alleged to establish standing “depends considerably upon whether the

plaintiff is himself an object of the action . . . at issue. If he is, there is ordinarily

little question that the action or inaction has caused him injury, and that a

judgment preventing or requiring the action will redress it.” Lujan v. Defenders

of Wildlife, 504 U.S. 555, 561-62 (1992). But when “a plaintiff’s asserted injury

arises from the government’s allegedly unlawful regulation (or lack of

regulation) of someone else, much more is needed.” Id. at 562.

Of course, the LSPRF did not come to court seeking relief. The United

States obtained an order compelling the LSPRF to turn over funds in its

possession representing any interest DeCay and Barre may have in any property

subject to the LSPRF’s control, thus drawing the LSPRF into the instant

litigation. The writs of garnishment compel the LSPRF to take particular action,

and the LSPRF asserts that the ordered action is unconstitutional under the

Tenth Amendment and, as to DeCay, subjects it to potential double exposure in

the future. In essence, the LSPRF is saying to the court “you can’t make me do

this.” Having been brought before the court involuntarily by another party, we

conclude that the LSPRF has the ability to say it cannot be the object of such

court actions. 2 Accordingly, the LSPRF, as the object of the writ of garnishment

and as a sovereign entity, has standing to assert that the United States lacks the

2

Of course whether LSPRF has standing to make the argument is distinct from

whether the argument has merit, a matter we address later.

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constitutional authority to compel it to release the funds.3 See Lujan, 504 U.S.

at 561; Holy Land Found., 445 F.3d at 780.4

We need not decide whether the LSPRF has standing to raise the

remaining objections to garnishment because DeCay and Barre plainly have

standing to assert exemptions to the garnishment of their property. Because

DeCay and Barre raise the same objections to garnishment that the LSPRF

makes, this court has jurisdiction to decide the case. See Arlington Heights v.

Metro. Hous. Dev. Corp., 429 U.S. 252, 263-64 (1977) (“In the ordinary case, a

party is denied standing to assert the rights of third persons. But we need not

decide whether the circumstances of this case would justify departure from that

prudential limitation . . . [f]or we have at least one individual plaintiff who has

demonstrated standing to assert these rights as his own.”); see also Horne v.

Flores, 129 S. Ct. 2579, 2592 (2009) (“Because the superintendent clearly has

standing to challenge the lower courts’ decisions, we need not consider whether

the Legislators also have standing to do so.”). Having concluded that the

appellants possess standing to challenge the final orders of garnishment, we now

turn to the merits of this dispute.

3

The LSPRF’s position in this case is similar to that of a garnishee asserting that the

district court lacks personal jurisdiction over it or a foreign garnishee asserting immunity as

a defense to the garnishment order. We have never held that a garnishee in either of those

situations lacks standing to object to the garnishment proceeding. See, e.g., FG Hemisphere

Assocs., LLC v. Republique du Congo, 455 F.3d 575, 584 (5th Cir. 2006) (“The sovereign

immunity claim may be raised by a garnishee as well as a foreign sovereign.”); Stena Rederi

AB v. Comision de Contratos del Comite Ejecutivo Gen., 923 F.2d 380, 391-92 (5th Cir. 1991)

(holding that the district court lacked personal jurisdiction over the garnishee and that the

garnishee, as an agency of a foreign state, was “entitled to invoke the shield of sovereign

immunity, whether against direct claims or an indirect writ of garnishment”).

4

Because of our conclusion that the double exposure question is not ripe, see infra at

Section IV.C., we do not decide whether LSPRF has standing to urge its argument that the

court’s order subjects it to double exposure.

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IV. Merits

The MVRA makes restitution mandatory for certain crimes, “including any

offense committed by fraud or deceit,” 18 U.S.C. § 3663A(a)(1), (c)(1)(A)(ii), and

authorizes the United States to enforce a restitution order in accordance with its

civil enforcement powers.5 The MVRA broadly permits the United States,

notwithstanding any other federal law, to enforce a restitution order “against all

property or rights to property of the person fined.” § 3613(a). Section 3613 of

the MVRA sets forth several enumerated exceptions to the United States’

authority to garnish any and all of the debtor’s property to satisfy a restitution

order; however, the statute does not exempt state-run pension plans.6 Further,

§ 3613(a)(2) explicitly states that the exemptions contained in the FDCPA, 28

U.S.C. § 3014, do not apply to the enforcement of a federal criminal judgment.

The appellants collectively make three arguments why the district court

erred in issuing the final garnishment orders against Barre and Decay. First,

the appellants assert that the defendants’ pension benefits are exempt from

garnishment under federal and state law. Second, Barre argues that, if the

United States may garnish his retirement benefits, the CCPA limits the United

States to garnishment of twenty-five percent of his monthly pension benefits.

Third, the LSPRF, joined by DeCay, asserts that, if the United States is allowed

to garnish Decay’s contributions into his retirement, the United States is

5

The FDCPA sets forth the civil enforcement procedures used by the United States to

recover monies owed under a restitution order. 28 U.S.C. § 3001(a)(1).

6

The MVRA incorporates most of the exemptions contained in § 6334(a)of the Internal

Revenue Code, which exempts particular property from levy for payment of federal taxes. The

only § 6334 exemption relevant to pension plans applies to four types of federally authorized

pension plans, including Railroad Retirement Act pensions, Railroad Unemployment

Insurance Act pensions, and pensions received by certain military-service persons. I.R.C.

§ 6334(a)(6). None of these exemptions are applicable to the pension benefit plan at issue in

the instant case.

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required to apply for a withdrawal of DeCay’s employee contributions. We

address each of these arguments in turn.

A. Garnishment of Pension Benefits Under the MVRA

The appellants assert that the United States may not garnish pension

benefits under the MVRA because (1) § 401(a)(13) of the Internal Revenue Code

(“IRC”) makes pension benefits inalienable; (2) the Tenth Amendment to the

United States Constitution precludes the United States from garnishing pension

funds controlled by the LSPRF; and (3) Louisiana constitutional and statutory

law exempt pension benefits from garnishment.

1. IRC § 401(a)(13)

The LSPRF argues that the defendants’ pension benefits are exempt from

garnishment because the IRC prohibits the assignment or alienation of

retirement benefits. I.R.C. § 401(a)(13)(A). Section 401(a)(13)(A) states that “[a]

trust shall not constitute a qualified trust under this section unless the plan of

which such trust is a part provides that benefits provided under the plan may

not be assigned or alienated.” This circuit has never addressed whether

§ 3613(a) of the MVRA overrides § 401(a)(13) of the IRC.

Section 3613(a) of the MVRA states that “Notwithstanding any other

Federal law . . . a judgment imposing a fine may be enforced against all property

or rights to property of the person fined.” (emphasis added). This language is

qualified only by the enumerated exceptions contained in § 3613(a)(1)–(3). We

conclude that the language in § 3613(a) authorizing the United States to enforce

a garnishment order against “all property or rights to property” of the debtor,

“[n]otwithstanding any other Federal law,” is sufficient to override the anti-

alienation provision of the IRC. Several factors compel us to conclude that the

MVRA allows garnishment of a defendant’s retirement benefits to satisfy a

criminal restitution order.

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First, the Supreme Court has recognized that the use of a

“notwithstanding” clause signals Congressional intent to supersede conflicting

provisions of any other statute. Caseros v. Alpine Ridge Group, 508 U.S. 10, 18

(1993) (“[T]he use of such a ‘notwithstanding’ clause clearly signals the drafter’s

intention that the provisions of the ‘notwithstanding’ section override conflicting

provisions of any other section. Likewise, the Courts of Appeals generally have

interpreted similar ‘notwithstanding’ language . . . to supersede all other laws,

stating that a clearer statement is difficult to imagine.”) (internal quotation

marks and citations omitted).

The appellants argue that the “notwithstanding” clause is insufficient to

override the anti-alienation language in § 401(a)(13) of the IRC under the

Supreme Court’s decision in Guidry v. Sheet Metal Workers National Pension

Fund, 493 U.S. 365 (1990). In Guidry, the Supreme Court was faced with the

question of whether § 501(b) of the Labor-Management Reporting and Disclosure

Act of 1959 (“LMRDA”)—which provided pension funds with a private right of

action to “recover damages or secure an accounting or other appropriate relief

for the benefit of the labor organizations”—allowed the government to create a

constructive trust on a defendant’s pension benefits. The Court held that the

“other appropriate relief” language in the LMRDA was insufficient to override

the anti-alienation provision in § 206(d) of the Employee Retirement Income

Security Act (“ERISA”). Id. at 375-76 (“We do not believe that congressional

intent would be effectuated by reading the LMRDA’s general reference to ‘other

appropriate relief’ as overriding an express, specific congressional directive that

pension benefits not be subject to assignment or alienation.”).

Unlike the general “other appropriate relief” language contained in the

LMRDA, the “notwithstanding any other Federal law” clause signals a clear

Congressional intent to override conflicting federal law. Indeed, we agree with

our sister circuit that “it appears that Congress accepted the Supreme Court’s

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invitation in Guidry by enacting the [MVRA].” United States v. Irving, 452 F.3d

110, 126 (2d Cir. 2003); see also United States v. Novak, 476 F.3d 1041, 1053 (9th

Cir. 2007) (en banc) (“In sum, all standard principles of statutory construction

support the conclusion that MVRA authorizes the enforcement of restitution

orders against retirement plan benefits, the anti-alienation provision of ERISA

notwithstanding.”). Our conclusion is bolstered by the fact that Congress

exempted certain retirement plans from garnishment under the MVRA, see

§ 3613(a)(1) (incorporating the exemptions in IRC § 6334(a)(6) for certain federal

annuity and pension payments), but did not include state-run pension plans in

the list. Cf. Waggoner v. Gonzales, 488 F.3d 632, 636 (5th Cir. 2007) (“The canon

of statutory construction ‘expressio unius est exclusio alterius (the expression of

one thing is the exclusion of another)’ indicates that [the listed ground] is the

only requirement.”) (citation omitted).

Second, reading § 3613(a) to allow garnishment of the defendants’

retirement benefits is consistent with the MVRA’s statutory scheme and

purpose. The only property exempt from garnishment under § 3613(a) is

property that the government cannot seize to satisfy the payment of federal

income taxes. 18 U.S.C. § 3613(a). Section 3613(c) underscores the

Congressional directive that restitution orders should be satisfied in the same

manner as tax liabilities. 18 U.S.C. § 3613(c) (stating that an order of restitution

imposed under this chapter “is a lien in favor of the United States on all property

and rights to property of the person fined as if the liability of the person fined

were a liability for a tax assessed under the Internal Revenue Code of 1986")

(emphasis added). As we have already recognized, pension plan benefits are

subject to levy under the IRC to collect unpaid taxes. See Shanbaum v. United

States, 32 F.3d 180, 183 (5th Cir. 1994); see also Irving, 452 F.3d at 126 (“ERISA

pension plans are not exempted from payment of taxes under 26 U.S.C. § 6334

[of the IRC], and thus they should not be exempted from payment of criminal

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fines. . . . Moreover, § 3613(c) [of the MVRA] demands that criminal fines in

favor of the United States should be enforced in the same manner as a tax

liability would be enforced.”).

Third, other circuit and district courts have concluded that the United

States may garnish a defendant’s pension benefits to satisfy a restitution order,

despite similar anti-alienation language contained in § 206(d) of ERISA. See

Irving, 452 F.3d at 126; Novak, 476 F.3d at 1053; United States v. Lazorwitz, 411

F. Supp. 2d 634, 637 (E.D.N.C. 2005) (holding that “neither ERISA’s anti-

alienation provision, 29 U.S.C. § 1056(d)(1), nor the anti-alienation provision in

the Internal Revenue Code, 26 U.S.C. § 401(a)(13), provide a bar to the

garnishment of a qualified pension plan”). Section 206(d) of ERISA states: “Each

pension plan shall provide that benefits provided under the plan may not be

assigned or alienated.” 29 U.S.C. § 1056(d)(1). We find these cases persuasive,

see Patterson v. Shumate, 504 U.S. 753, 759 (1992) (referring to IRC § 401(a)(13)

and ERISA § 206(d) as “coordinate section[s]” containing “similar restrictions”),

and conclude that § 3613(a) of the MVRA authorizes the United States to

garnish retirement benefits, notwithstanding the anti-alienation provision in

§ 401(a)(13) of the IRC.

2. The Tenth Amendment

The appellants also argue that the garnishment writs violate the Tenth

Amendment to the United States Constitution. This claim hinges on the

appellants’ contention that federal law does not govern state-run benefit plans

and the MVRA does not supersede Louisiana’s broad police powers. We reject

the appellants’ Tenth Amendment argument.

The Tenth Amendment declares that “powers not delegated to the United

States by the Constitution, nor prohibited by it to the States, are reserved to the

States respectively, or to the people.” U.S. C ONST. amend. X. When Congress

properly exercises its authority under an enumerated constitutional power, the

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Tenth Amendment is not implicated. See New York v. United States, 505 U.S.

144, 156 (1992); Deer Park Indep. Sch. Dist. v. Harris County Appraisal Dist.,

132 F.3d 1095, 1099 (5th Cir. 1998). The appellants do not contest that Congress

passed the MVRA and FDCPA pursuant to an enumerated constitutional power.7

Nor do the appellants contest that the Necessary and Proper Clause grants

Congress the authority to craft appropriate penalties to enforce its criminal laws.

United States v. Comstock, 130 S. Ct. 1949, 1958 (2010) (“Neither Congress’

power to criminalize conduct, nor its power to imprison individuals who engage

in that conduct, nor its power to enact laws governing prisons and prisoners, is

explicitly mentioned in the Constitution. But Congress nonetheless possesses

broad authority to do each of those things in the course of ‘carrying into

Execution’ the enumerated powers ‘vested by’ the ‘Constitution in the

Government of the United States,’ Art. I, § 8, cl. 18 - - authority granted by the

Necessary and Proper Clause.”).8

The appellants assert that allowing the United States to garnish pension

benefits administered by the LSPRF violates the Tenth Amendment because the

federal government is interfering with state administration of pension benefits.

The appellants argument here is misdirected. Garnishing DeCay’s and Barre’s

pension benefits has no effect on Louisiana state law; rather it penalizes DeCay

and Barre for violating federal law. While the LSPRF is implicated as a

garnishee, its pension system is not altered by requiring the LSRPF to pay the

7

It is also undisputed that Congress had the authority to convict Barre and DeCay of

the predicate crimes underlying the restitution order. See, e.g., United States v. Brumley, 116

F.3d 728, 730 (5th Cir. 1997) (holding that the Commerce Clause supports the mail fraud

criminal statute).

8

The parties submitted letters briefing the impact of the Supreme Court’s decision in

Comstock on the instant case. See FED . R. APP . P. 28(j). We agree with the Government that

Comstock supports a conclusion that Congress properly exercised its authority to enact the

MVRA making restitution mandatory for particular crimes and that, pursuant to this

authority, the United States may garnish a defendant’s state pension benefits.

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United States, rather than the judgment-debtors. Further, to the extent that a

state desires to participate in the management of pension benefits, it must

submit to federal criminal and civil laws allowing for debt-collection measures.

28 U.S.C. § 3003(d) (stating that the FDCPA “shall preempt State law to the

extent such law is inconsistent with a provision of this chapter”). The federal

government’s inability to garnish state-run pension benefits would substantially

impair the effectiveness of the FDCPA and MVRA. See United States v. Phillips,

303 F.3d 548, 551 (5th Cir. 2002) (“The FDCPA . . . provides a uniform system

for prosecutors to follow rather than resorting to the non-uniform procedures

provided by the states.”). Because the United States has the constitutional

authority to impose mandatory restitution for particular federal crimes and seek

garnishment of any available resources to satisfy that restitution order, we reject

the appellants’ Tenth Amendment challenge.

3. Louisiana Law

The appellants assert that the United States lacks the authority to garnish

DeCay’s and Barre’s pension benefits because Louisiana law precludes

enforcement of a restitution order against pension benefits. See L A. C ONST. art.

X, § 29(E)(5)(a) (1974); L A. R EV. S TAT. § 11:2182 (1991). To the extent Louisiana

law is inconsistent with the FDCPA and MVRA, Louisiana law is preempted.

28 U.S.C. § 3003(d); see also United States v. Wilson, No. CR-305-008, 2007 WL

4557774, at *1 n.2 (S.D. Ga. Dec. 20, 2007) (“To the extent that state law . . .

conflicts with federal law authorizing the garnishment of Defendant’s pension

benefits, it is preempted.”); United States v. McClanahan, No.3:03-00053, 2006

WL 1455698, at *4 (S.D. W. Va. May 24, 2006) (“Although West Virginia

prohibits the garnishment of state pensions, federal law expressly preempts

state exemptions when the federal government is attempting to collect a fine or

restitution.”).

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In sum, the MVRA authorizes the United States to use its civil

enforcement powers to garnish a defendant’s retirement plan benefits,

notwithstanding the fact that pension benefits are generally inalienable under

federal and state law.

B. The CCPA’s Limitation on Garnishment of Disposable Earnings

The LSPRF and Barre assert that, even if Barre’s retirement benefits are

subject to garnishment, the United States cannot garnish more than twenty-five

percent of Barre’s monthly pension benefits under § 303 of the CCPA. Section

3613(a)(3) of the MVRA states that the protections of the CCPA shall apply to

enforcement of the judgment under either federal or state law. The CCPA

provides that

the maximum part of the aggregate disposable earnings of an

individual for any workweek which is subjected to garnishment may

not exceed

(1) 25 per centum of his disposable earnings for that

week, or

(2) the amount by which his disposable earnings for

that week exceed thirty times the Federal minimum

hourly wage prescribed by section 206(a)(1) of Title 29

in effect at the time the earnings are payable,

whichever is less. In the case of earnings for any pay

period other than a week, the Secretary of Labor shall

by regulation prescribe a multiple of the Federal

minimum hourly wage equivalent in effect to that set

forth in paragraph (2).

15 U.S.C. § 1673(a).

The parties dispute whether Barre’s monthly benefit payments constitute

“earnings” under the CCPA. The CCPA defines “earnings” as “compensation

paid or payable for personal services, whether denominated as wages, salary,

commission, bonus, or otherwise, and includes periodic payments pursuant to a

pension or retirement program.” 15 U.S.C. § 1672(a) (emphasis added).

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The Supreme Court has cautioned that the terms “earnings” and

“disposable earnings” under the CCPA are “limited to ‘periodic payments of

compensation and (do) not pertain to every asset that is traceable in some way

to such compensation.’” Kokoszka v. Belford, 417 U.S. 642, 651 (1974) (citation

omitted). Here, the question is whether payments made from an employer’s

retirement program to an employee are too attenuated to be considered

“earnings” under the CCPA.

The district courts around the country have divided over whether monthly

pension-benefit payments constitute “earnings” under the CCPA. Several

district courts have concluded that “once passed to a retirement account or

annuity in the hands of the employee, the funds in the account or annuity are

not ‘earnings’ under the CCPA, and thus not subject to the 25% cap, even if they

are distributed in periodic payments—in other words, the distributions from the

fund to the defendant are not ‘disposable earnings’ under § 303.” United States

v. Belan, No. 2:07-x-50979, 2008 WL 2444496, at *3 (E.D. Mich. June 13, 2008);

see also United States v. Crawford, F-04-0200, 2006 WL 2458710, at *2-3 (E.D.

Cal. Aug. 22, 2006); United States v. Laws, 352 F. Supp. 2d 707, 713-14 (E.D. Va.

2004). However, at least one district court has reached the opposite conclusion

and held that periodic payments of retirement benefits are “earnings” under the

CCPA. McLanahan, 2006 WL 1455698, at *3 (holding that “under clear

statutory language, it appears that the Government may garnish only 25% of the

Defendant’s pension”).

We find the statutory language unambiguous and hold that the United

States may garnish only twenty-five percent of Barre’s monthly pension benefits.

The statute explicitly defines “earnings” to include “periodic payments made

pursuant to a pension or retirement program.” 15 U.S.C. § 1672(a)(emphasis

added). The term “pursuant to” is generally defined as “in compliance with; in

accordance with; under [or] . . . as authorized by . . . [or] in carrying out.”

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B LACK’S L AW D ICTIONARY (8th ed. 2004).9 The parties do not dispute the terms

of the pension plan or that the plan entitles Barre to monthly pension-benefit

payments. Because the United States does not dispute that the terms of the

pension plan authorize Barre to receive monthly pension benefits, we conclude

that the payments are being made “pursuant to” the pension fund and therefore

constitute “earnings” under the CCPA.10 Accordingly, we conclude that the

United States may not garnish more than twenty-five percent of Barre’s monthly

pension benefits under the CCPA.

C. Formalities of DeCay’s Cash-Out

Finally, the LSPRF asserts that the district court erred by allowing the

United States to cash-out DeCay’s contributions to his retirement account

without applying for a refund. The LSPRF asserts that the garnishment order

as to DeCay is either improper or incomplete because the United States did not

apply for a withdrawal of DeCay’s benefits. The final garnishment order issued

by the district court compels the LSPRF to “immediately pay to the United

9

We observe that the cases cited by the United States misquote the statutory language

defining “earnings” in concluding that payments to a pension fund are earnings, whereas

payments from a pension fund are not. Those cases mistakenly quote the statutory definition

of earnings as limited to “periodic payments to a pension or retirement program.” See Belan,

2006 WL 2444496, at *3, Laws, 352 F. Supp. 2d at 713; Aetna Cas. & Sur. Co., 965 F. Supp.

104, 109 (D. Mass. 1996). We conclude that the “pursuant to” phrase includes periodic

payments from the pension fund to the employee if the payments are being made in

accordance with the terms of the plan.

10

Our conclusion is also consistent with the legislative history and Congressional intent

behind the passage of § 303 of the CCPA. In passing the CCPA, Congress was attempting to

combat the problems of unemployment and bankruptcy that frequently resulted from the

unrestricted garnishment of a debtor’s wages. H.R. REP . NO . 1040, 90th Cong., 2d Sess. (1968),

reprinted in 1968 U.S.C.C.A.N. 1962, 1979. The Committee explicitly recognized that

unrestricted garnishment of a debtor’s wages frequently resulted in “a disruption of

employment, production, and consumption,” harming the debtor and interstate commerce. Id.

at 1063. Retirement benefits, like wages, are intended to provide a “continued means of

support” and subsistence for a judgment-debtor and his family. Congress incorporated § 303

of the CCPA into the MVRA, recognizing that the purpose of a restitution order would be

thwarted if it simultaneously turned the judgment-debtor into a ward of the state and denied

the debtor the ability to “insure a continued means of support” for him and his family.

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States of America the amount of $77,898.00, which represents the present cash-

out value of DeCay’s pension account with the LSPRF.”

The parties do not dispute that DeCay is currently entitled to cash-out his

employee contributions, and the LSPRF does not suggest that DeCay’s right to

cash-out his contributions is in any way conditional. Instead, the LSPRF

asserts that the United States must apply for a refund of DeCay’s contributions

because the LSPRF may be subject to future liability if the United States is not

forced to execute paperwork waiving DeCay’s future pension benefits. Louisiana

law requires a pension beneficiary to apply for a reimbursement of his employee

contributions, thereby extinguishing the employee’s rights in the pension fund.

See L A. R EV. S TAT. A NN. § 11:2175(C)(1) (1995) (stating that an eligible member

“may apply for and obtain a refund of the amount of his contributions by making

application on the form furnished by the fund . . . A refund automatically cancels

all rights in the fund”).

The United States argues that DeCay is adequately protected from future

litigation by the FDCPA, and thus its failure to abide by Louisiana law is

inconsequential. Section 3206 of the FDCPA states:

A person who pursuant to an execution or order issued

under this chapter by a court pays or delivers to the

United States . . . money or other personal property in

which a judgment debtor has or will have an interest,

or so pays a debt such person owes the judgment

debtor, is discharged from such debt to the judgment

debtor to the extent of the payment or delivery.

The United States thus asserts that it was not required to apply formally for a

withdrawal of DeCay’s employee contributions because § 3206 insulates the

LSPRF from litigation and waives DeCay’s rights to any future pension benefits.

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We conclude that LSPRF has not sufficiently established that it is

currently subject to a risk of double exposure upon payment of the $77,898;11

accordingly, the matter is not ripe for our resolution at this point.

V. Conclusion

We conclude that the United States may garnish the defendants’

retirement benefits to satisfy a criminal restitution order, but the CCPA limits

the United States’ authority to garnish Barre’s pension benefits to twenty-five

percent of his monthly payment. Accordingly, we REVERSE the final orders of

garnishment entered against Barre, AFFIRM as to DeCay, and REMAND the

case to the district court for entry of final garnishment orders consistent with

our holding in this case.

11

The United States clearly has the right to obtain the cash-out in question. The fact

that DeCay possessed the option to either cash-out his retirement account or wait and receive

future monthly benefits allows the United States to seek an order compelling the LSPRF to

cash-out DeCay’s benefits. Cf. United States v. Nat’l Bank of Commerce, 472 U.S. 713, 724-26

(1985) (holding that the right to withdraw funds under state law is a right to property and the

IRS may secure—and thus withdraw the funds—by executing a levy); Kane v. Capital

Guardian Trust Co., 145 F.3d 1218, 1223 (10th Cir. 1998) (“In the notice of levy, the IRS

exercised Kane’s right to receive the cash value of his mutual fund shares when it directed [the

garnishee] to liquidate the IRA and send it the cash proceeds.”); United States v. Metro. Life

Ins., 874 F.2d 1497, 1500 (11th Cir. 1989) (“[U]nder state law the taxpayer had the right to

withdraw the full value of the annuity. The issue is whether the right is sufficient to obligate

the [garnishee] under section 6332(a) to surrender the funds subject to the withdrawal right

to the IRS upon receipt of the notice of levy. We hold that it is.”).

18