United States District Court, E.D. Michigan, Southern Division
MEMORANDUM AND ORDER STAYING PROCEEDINGS ON PLAINTIFF'S MOTION FOR RELIEF FROM JUDGMENT (Doc. 21)
AVERN COHN, District Judge.
This is a case under the Employment Retirement Income Security Act (ERISA), 29 U.S.C. § 1001, et seq. Plaintiff Stanley Strobel, presently on parole, was formerly a state prisoner. Plaintiff is also a former employee of General Motors Corporation (GM). Plaintiff retired from GM with a monthly pension benefit in the amount of $3, 160.00 which he receives from Fidelity. As will be explained, the State Treasurer, a defendant in this case, brought an action against plaintiff in state court under the State Correctional Facility Reimbursement Act, (SCFRA), M.C.L. § 800.401, to recover the costs of his incarceration which involved freezing his assets, including his pension benefits. While the state court case was pending, but a day before a final judgment was entered, plaintiff filed suit in federal court, essentially claiming that the state's attempt to recoup the costs of incarceration via his pension violates ERISA. Plaintiff named as defendants Andy Dillon, in his official capacity as State Treasurer, and Bill Schuette, Attorney General for the State of Michigan, also in his official capacity. The two count complaint claimed an ERISA violation under Count I and sought injunctive relief based on ERISA under Count II. The Court dismissed the complaint on the grounds that plaintiff's claims were barred by Rooker-Feldman and res judicata. (Doc. 19).
Before the Court is plaintiff's motion for relief from judgment. As will be explained, plaintiff is entitled to the relief he seeks. This is so because the Court did not take into account the fact that an injunction was entered in 2008 against the State of Michigan barring it obtaining pension benefits from any GM pension plan under the SCFRA, Gale v. General Motors, 556 F.Supp.2d 689 (E.D. Mich. 2008). Neither plaintiff's former counsel nor, more importantly, defendants made the Court aware of the Gale decision.
As will also be explained, a ruling on the motion is STAYED pending resolution of an appeal in a similar case, Robbennolt v. Washington, 2013 WL 4670013 (E.D. Mich. Aug. 30, 2013).
In order to fully understand plaintiff's motion, it is necessary to set forth the background of the Gale decision, plaintiff's case, and the Robbennolt case.
In 2003, the Michigan State Treasurer filed an action in the Circuit Court for Cheboygan County against Gale, an inmate in a state correctional facility, seeking obtain his pension benefits under the GM Pension Plan. A Final Order was entered in the Circuit Court, on October 20, 2003, ordering Gale to notify GM that all pension benefits should be mailed to his correctional facility and further ordering the warden to make monthly distributions to the State of Michigan equal to 90% of Gale's pension benefits. The Order also provided that if Gale failed or refused to notify GM, then the warden was ordered to notify GM.
In October, 2006, Gale filed a Motion for Relief of Judgment in the Circuit Court contending that the Sixth Circuit decision in DaimlerChrysler v. Cox, 447 F.3d 967 (6th Cir. 2006), invalidated the Circuit Court's 2003 Order. In Cox, the Sixth Circuit held that notices and order issued under SCFRA that required monthly pension checks be sent to the prison over a prisoner's objection violated ERISA's anti-alienation provision, 29 U.S.C. § 1056(d)(1) (generally providing that plan benefits may not be assigned or alienated).
On November 9, 2006, the Circuit Court denied Gale's Motion. Prior to January 1, 2007, benefits payable to Gale from the GM Pension Plan had been forwarded to the warden at his correctional facility.
On December 26, 2006, based on Cox, Gale sued GM and the Michigan State Treasurer in this district seeking relief from having his pension benefits involuntarily taken by the State of Michigan. Gale v. General Motors, No. 06-15710 (E.D. Mich. 2006). Due to the conflict between the Sixth Circuit and the Michigan Supreme Court's decision in State Treasurer v. Abbott, 468 Mich. 143 (2003), GM sought a declaration that the SCFRA violated provisions of ERISA to the extent it allowed the State of Michigan to involuntarily attach or assign monthly pension benefits. In addition, starting January 1, 2007, GM suspended all payments of retirees' pension benefits being sent to prison facilities.
In response to GM's Counterclaim and Crossclaim, the State Treasurer pointed out that the plaintiff in Gale had complied with the state court order and directed GM to change his address. The district court referred the case to a magistrate judge for pre-trial matters. On March 24, 2007, the magistrate judge issued a Report and Recommendation (MJRR) addressing GM's Motion for Declaratory Judgment. The MJRR summarized the relief sought by GM:
Here, in the administration of its pension and retirement programs, GM claims it needs guidance from this Court regarding the payment of benefits to Plaintiff and to similarly situated retirees (Dkt. # 28, p. 2). GM therefore seeks a declaration that prior to pension benefits being suspended, it had no liability for forwarding pension benefits to Plaintiff's prison address in accordance with the state court order entered by the Circuit Court for Cheboygan County and in reliance on the Michigan Supreme Court's decision in State Treasurer v. Abbott, 468 Mich. 143, 660 N.W.2d 714 (2003), cert. denied, 540 U.S. 1112, 124 S.Ct. 1038, 157 L.Ed.2d 901 (2004). Further, GM seeks a declaration that under the holding in DaimlerChrysler future pensions benefits should be forwarded pursuant to Plaintiff's instructions.
556 F.Supp.2d at 702.
The magistrate judge also noted that in Cox, the Sixth Circuit held that the state court orders requiring that pension benefits be sent to the warden resulted in a prohibited alienation of benefits under ERISA and were void:
The Sixth Circuit rejected petitioner's argument that the orders and notices did not result in a prohibited alienation of benefits because the state court order only directed the warden to send notices, but did not directly require DaimlerChrysler to do anything. Id. The court observed that DaimlerChrysler sought a declaration as to whether it must comply with the wardens' notices and reasoned that to hold that DaimlerChrysler had to comply with the notices would create a legal obligation enforceable against the plan before distribution. Accordingly, the court concluded that the notices were void to the extent that ...