United States v. Cunningham
866 F. Supp. 2d 1050
S.D. Iowa2012Background
- IPERS provides retirement benefits to Iowa state employees; Defendant participated from 1984 to 2006.
- Defendant was determined disabled in 2008 and began receiving IPERS disability retirement payments in March 2009.
- Defendant pled guilty in 2008 to fraud related to WIA funds and was sentenced to restitution; substantial restitution remains unpaid.
- Clerk issued a Writ of Continuing Garnishment in February 2012 directing IPERS to withhold nonexempt funds to satisfy restitution.
- Defendant moved to quash the Writ and objected to garnishment of IPERS benefits; Government resisted and a hearing was held.
- Court must determine whether and how IPERS benefits may be garnished to satisfy restitution under federal law.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the writ complied with 28 U.S.C. § 3205(b)(1)(B) | Government: notices were issued >30 days before filing | Defendant: no written demand more than 30 days prior | Yes; writ satisfied § 3205(b)(1)(B) |
| Whether IPERS benefits are subject to garnishment given anti-alienation provisions | Exemptions do not preclude garnishment for restitution under federal law | Iowa and ERISA anti-alienation provisions bar garnishment | Preemption applies; garnishment allowed under 18 U.S.C. § 3613(a) |
| Equal protection—exemptions for civil vs criminal judgments | Exemption scheme has rational basis related to restitution/penalty goals | Classification lacks rational basis | Not unconstitutional; rational basis upheld |
| Equal protection—exemptions for certain pension types (6334(a)(6)) | Exemptions should be uniformly applied | Rational exemptions exist for military, Railroad Retirement, Medal of Honor | Not an equal protection violation; exemptions rationally related to policy goals |
| Whether 25% cap applies to IPERS earnings under 15 U.S.C. § 1673(a) | IPERS payments are earnings; cap applies | Earnings definition applies to payments from pension fund | Garnishment limited to 25% of IPERS benefits |
Key Cases Cited
- United States v. Novak, 476 F.3d 1041 (9th Cir. 2007) (overrides ERISA anti-alienation for restitution debts)
- United States v. DeCay, 620 F.3d 534 (5th Cir. 2010) (preempts state exemptions; §3613(a) not limited by state law)
- United States v. Hosking, 567 F.3d 329 (7th Cir. 2009) (ERISA anti-alienation does not bar garnishment for restitution)
- Nordlinger v. Hahn, 505 U.S. 1 (1982) (rational basis review tolerates exemptions with policy justifications)
- Regan v. Taxation With Representation of Washington, 461 U.S. 540 (1983) (legitimate state interests can justify exemptions)
- Metro. Life Ins. Co. v. Ward, 470 U.S. 869 (1985) (external exemptions may be sustained to serve public policy)
- Armour v. City of Indianapolis, 132 S. Ct. 2073 (2012) (administrative considerations can justify regulatory distinctions)