The Second Circuit Court of Appeals recently decided Off. Create Corp. v. Planet Ent., LLC, No. 24-1879, —F.4th—-, 2025 WL 1634970 (2d Cir. June 10, 2025). In this case, Petitioner Office Create Corporation had previously won an arbitration award against Planet Entertainment, LLC and Steve Grossman, leading to a substantial monetary judgment. To satisfy this judgment, Office Create sought to restrain certain retirement accounts that it claimed Grossman had an interest in. These accounts, held by Merrill Lynch, were designated as “Retirement Cash Management Accounts” and contained about two million dollars. Office Create argued that these accounts should be accessible to satisfy the judgment due to an exception in New York law. However, Grossman and Planet Entertainment contended that these accounts were protected under the anti-alienation provision of ERISA, which preempts state law that might allow such enforcement actions. The district court sided with Grossman, affirming that ERISA’s provisions took precedence, thereby exempting the accounts from garnishment.
The core legal issue is whether the New York Civil Practice Law and Rules (NYCPLR) section 5205(c)(5) is preempted by ERISA’s anti-alienation provision.
Under the Supremacy Clause of the U.S. Constitution, federal law can preempt state law. ERISA’s preemption clause broadly states that it supersedes any state laws that relate to any employee benefit plan. This is intended to maintain uniform regulatory standards across states.
ERISA’s anti-alienation provision is particularly stringent, prohibiting the assignment or alienation of pension plan benefits. It 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). This provision underscores ERISA’s aim to protect retirement funds until retirement, shielding them from creditors. The court highlighted that this provision is a strong mechanism to prevent the dissipation of retirement funds.
NYCPLR § 5205(c)(5) allows certain additions to retirement accounts to be exempt from creditor actions, except those made shortly before a judgment claim. Office Create argued this exception applied to the Merrill accounts. However, the court found that ERISA’s anti-alienation provision preempts this state law exception because it directly conflicts with ERISA’s intention to protect retirement funds, including from creditor claims.
The Second Circuit affirmed the district court’s ruling, emphasizing that ERISA preempts NYCPLR § 5205(c)(5) when it comes to pension plans. This decision reinforces the protective measures under ERISA, ensuring that retirement funds remain intact from third-party claims.
*Please note that this blog is a summary of a reported legal decision and does not constitute legal advice. This blog has not been updated to note any subsequent change in status, including whether a decision is reconsidered or vacated. The case above was handled by other law firms, but if you have questions about how the developing law impacts your ERISA benefit claim, the attorneys at Roberts Disability Law, P.C. may be able to advise you so please contact us.
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