Rhoades v. Casey, 196 F.3d 592 (5th Cir. 1999)-This case involved the anti-alienation provisions of ERISA. Michael Casey was the first president and chief executive officer of FirstBanc. He was also a participant in and trustee of the bank’s Employees Stock Ownership Plan ("ESOP"). In 1991, the Office of Thrift Supervision ("OTS") and the Texas Savings and Loan Department ("TSLD") raised questions regarding violations of banking regulations, breach of fiduciary duties, and whether the bank engaged in unsafe or unsound banking practices. After investigation, OTS and TSLD issued cease and desist orders, wherein Casey agreed to forfeit all claims for ESOP benefits.
In August 1995, Robert Rhoades, the new trustee of the FirstBanc ESOP, dissolved the FirstBanc ESOP and distributed the ESOP funds to the ESOP participants or their beneficiaries. OTS and TSLD informed Rhoades of the orders against Casey along with Casey’s agreement to forfeit his benefits. But Casey also contacted Rhoades and disputed the validity of those orders. On November 1, 1995, Rhoades filed an interpleader action, and deposited into the Registry of the Court the $ 77,064.04 in dispute.
This court found that Casey’s forfeiture of his ESOP benefits did not violate the anti-alienation provision of ERISA, since there exists an exception for a knowing and voluntary waiver of retirement benefits executed to reach a settlement. The anti-alienation provision of ERISA, 29 U.S.C. § 1056(d)(1) states that each pension plan "shall provide that benefits provided under the plan may not be assigned or alienated." In general, the anti-alienation provision will be read broadly as a "protective policy of special intensity" which reflects the policy that retirement funds should remain inviolate until retirement. Boggs v. Boggs, 520 U.S. 833, 851 (1997). However, Stobnicki v. Textron, 868 F.2d 1460, 1465 (5th Cir. 1989) held that "a controversy between good-faith adverse claimants to pension plan benefits is subject to settlement like any other, and that an assignment made pursuant to a bona-fide settlement of such a controversy is not invalidated by the anti-alienation provision of 29 U.S.C. § 1056(d)(1)." Furthermore, Casey was "the ultimate sophisticated party in a transaction such as this because he was CEO of FirstBanc and trustee of the ESOP."
