United Metal Products Corporation v. National Bank of Detroit

Summary

The Sixth Circuit held that ERISA and Internal Revenue Code anti-alienation provisions do not contain an implied fraud exception permitting an employer to garnish an employee’s pension or profit-sharing benefits to recover losses from employee embezzlement. The court affirmed the denial of declaratory relief, concluding that creating such an exception was a policy choice for Congress rather than the judiciary. Judge Wellford dissented, arguing that a narrow exception should apply where an employee’s criminal misconduct harmed the employer and other plan participants.

Holdings

1. There is no judicially implied fraud exception to ERISA's anti-alienation provision, 29 U.S.C. § 1056(d), or the Internal Revenue Code's corresponding provision, 26 U.S.C. § 401(a)(13), that permits an employer to garnish an employee's pension or profit-sharing benefits because of the employee's fraudulent or criminal conduct directed against the employer.

Questions Presented

1. Whether ERISA's anti-alienation provision and the Internal Revenue Code's corresponding provision contain an implied exception permitting an employer to garnish an employee's pension or profit-sharing benefits because the employee committed fraud, embezzlement, or other criminal misconduct against the employer.

Disposition

affirmed