Daniel Farrell v. Boeing Employees Credit Union ( 2020 )

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
DANIEL FARRELL, No. 19-16130
Plaintiff-Appellant,
D.C. No.
v. 5:16-cv-02711-
NC
BOEING EMPLOYEES CREDIT UNION;
MOORE BREWER & WOLFE, a
Professional Corporation, OPINION
Defendants-Appellees.
Appeal from the United States District Court
for the Northern District of California
Nathanael M. Cousins, Magistrate Judge, Presiding
Argued and Submitted June 12, 2020
San Francisco, California
Filed July 16, 2020
Before: Milan D. Smith, Jr. and Andrew D. Hurwitz,
Circuit Judges, and Timothy M. Burgess, * District Judge.
Opinion by Judge Hurwitz
*
The Honorable Timothy M. Burgess, United States Chief District
Judge for the District of Alaska, sitting by designation.
2 FARRELL V. BOEING EMPLOYEES CREDIT UNION
SUMMARY **
Fair Debt Collection Practices Act
The panel affirmed the district court’s summary
judgment in favor of defendants on claims that the
garnishment of plaintiff’s wages violated the Fair Debt
Collection Practices Act and California law.
Defendant obtained a judgment debt against plaintiff in
California state court in 2010. Plaintiff moved to Indiana in
2012. Defendant obtained a California wage garnishment
order against plaintiff’s federal employer, which garnished
his wages from 2012 to 2015. Plaintiff moved to Texas in
2014. He alleged that the continued garnishment of his
wages, absent domestication of the California judgment in
Indiana and Texas, violated the FDCPA and California law.
The panel held that the Hatch Act Reform Amendments
of 1993, 5 U.S.C. § 5520a(b), waived the federal
government’s sovereign immunity and subjected a federal
employee’s pay to “legal process in the same manner and to
the same extent as if the agency were a private person.”
Thus, federal employees’ wages are subject to garnishment
to the extent allowed by state law. The panel held that
plaintiff’s wages were properly garnished under California
law because the California court issuing the garnishment
order had jurisdiction over the garnishee, which was the
federal government, and defendant did not need to
**
This summary constitutes no part of the opinion of the court. It
has been prepared by court staff for the convenience of the reader.
FARRELL V. BOEING EMPLOYEES CREDIT UNION 3
domesticate the California judgment in any other state to
reach plaintiff’s federal wages.
COUNSEL
Matthew M. Loker (argued) and Abbas Kazerounian,
Kazerouni Law Group APC, Arroyo Grande, California, for
Plaintiff-Appellant.
Eric A. Schneider (argued) and David J. Billings, Anderson
McPharlin & Conners LLP, Los Angeles, California, for
Defendants-Appellees.
OPINION
HURWITZ, Circuit Judge:
In 2010, Boeing Employees Credit Union (“BECU”)
obtained a California state court judgment against Daniel
Farrell. In 2012, BECU obtained an earnings withholding
order (the California equivalent of a wage garnishment
order) from the state court and served it on the federal
government, Farrell’s employer. Farrell had moved from
California to Indiana shortly before the order was served; he
later moved to Texas but remained employed by the federal
government while living in each state.
The issue for decision is whether the federal statute
permitting garnishment of federal employees’ wages,
5 U.S.C. § 5520a, allowed the continuing garnishment of
Farrell’s wages under the California order after he left that
state, or whether BECU was instead required to domesticate
the California judgment first in Indiana and then in Texas
4 FARRELL V. BOEING EMPLOYEES CREDIT UNION
and pursue post-judgment collection efforts in each of those
states. We hold that because the garnishment order was
properly served on the federal government and Farrell
remained a government employee, his federal wages were
properly garnished under the California order. We therefore
affirm the judgment of the district court.
I
Farrell is a civilian employee of the Department of
Defense (“DOD”). In 2009, Farrell purchased a vehicle
through an installment contract later assigned to BECU.
After Farrell defaulted on the contract, BECU obtained a
default judgment in California state court in 2010.
In 2012, Farrell moved to Indiana, but remained a federal
employee. Shortly thereafter, a law firm representing BECU
obtained a California earnings withholding order pursuant to
California Civil Procedure Code § 706.021 and served it on
the DOD. Pursuant to the order, the DOD garnished
Farrell’s wages from 2012 to 2015 to satisfy the outstanding
judgment. Farrell moved from Indiana to Texas in 2014.
In 2016, Farrell sued BECU and its lawyers (collectively,
“BECU”) in California state court, alleging that the
continued garnishment of his wages absent domestication of
the California judgment in Indiana and Texas violated the
Fair Debt Collection Practices Act, 15 U.S.C. § 1692 et seq.,
and California law. After removal, the district court granted
summary judgment to BECU and Farrell appealed.
This Court affirmed in part, vacated in part, and
remanded. Farrell v. Boeing Emps. Credit Union, 761 F.
App’x 682 (9th Cir. 2019). The panel first held that Farrell’s
judgment debt was within the purview of 5 U.S.C. § 5520a
and its implementing regulations. Id. at 684–85. The panel
FARRELL V. BOEING EMPLOYEES CREDIT UNION 5
then noted that whether the statute “requires compliance
with the garnishment laws of the state of the debtor’s
residence appears to present an issue of first impression” and
vacated and remanded for a complete analysis of the issue.
Id. at 685. On remand, the district court was also instructed
to consider: (1) the potential application of Indiana and
Texas judgment domestication statutes; (2) “the lack of a
clear statutory mandate allowing for interstate garnishment
of federal employees’ wages in the commercial debt context,
in contrast to the family law context”; and (3) the amount of
deference owed to the views of the Office of Personnel
Management (“OPM”). Id.
On remand, the district court again granted summary
judgment to BECU. The court found the Indiana and Texas
domestication statutes irrelevant, because the garnishment
order had been properly served on Farrell’s employer, the
federal government, and Farrell remained employed by the
government throughout the relevant period. The court did
not find the lack of statutory authority for interstate
garnishment dispositive given the appropriate service of the
California earnings withholding order on the federal
government and Farrell’s continued federal employment.
Finally, the district court determined that OPM had not
directly spoken on this issue. Farrell again appealed. We
have jurisdiction under 28 U.S.C. § 1291 and review the
summary judgment de novo. Comcast of Sacramento I, LLC
v. Sacramento Metro. Cable Television Comm’n, 923 F.3d
1163, 1168 (9th Cir. 2019).
II
Garnishment is a civil action brought by a creditor
against a third party, seeking access to the debtor’s property
in the hands of the third party. See Wash. State Dep’t of Soc.
& Health Servs. v. Guardianship Estate of Keffeler, 537 U.S.
6 FARRELL V. BOEING EMPLOYEES CREDIT UNION
371, 383 (2003) (citing Black’s Law Dictionary 689 (7th ed.
1999)). Garnishment, traditionally a creature of state law,
see Harris v. Balk, 198 U.S. 215, 222 (1905), can reach
wages owed by an employer to the debtor, see United States
v. Morton, 467 U.S. 822, 832 & n.15 (1984). Because
garnishment is a suit against the third-party garnishee, not
the debtor, a federal employee’s wages may not be garnished
absent a waiver of sovereign immunity. See Franchise Tax
Bd. of Cal. v. U.S. Postal Serv., 467 U.S. 512, 516–17 (1984)
(“[U]nless waived, sovereign immunity prevents the creditor
of a federal employee from collecting a debt through a
judicial order requiring the United States to garnishee the
employee’s salary.”).
The Hatch Act Reform Amendments of 1993 waived the
federal government’s sovereign immunity and subjected a
federal employee’s pay to “legal process in the same manner
and to the same extent as if the agency were a private
person.” 5 U.S.C. § 5520a(b). Legal process includes “any
writ, order, summons, or other similar process in the nature
of garnishment” authorized under state or local law that
“orders the employing agency of such employee to withhold
an amount from the pay of such employee” to satisfy a debt.
Id. § 5520a(a)(3). The statute was designed to “remove
federal employees’ immunity from garnishment” and treat
them “the same as all other Americans.” S. Rep. No. 103-
57, at 9 (1993). By subjecting the pay of federal employees
to the process applicable to pay from private employers, the
statute incorporates state law, see First Va. Bank v.
Randolph, 110 F.3d 75, 79 (D.C. Cir. 1997), and thus makes
“federal employees’ wages subject to garnishment only to
this extent,” S. Rep. No. 103-57, at 6.
FARRELL V. BOEING EMPLOYEES CREDIT UNION 7
A
Thus, the central question is whether Farrell’s federal
wages were properly garnished under California law. In
California, “[e]xcept as otherwise provided by law, all
property of the judgment debtor is subject to enforcement of
a money judgment.” Cal. Civ. Proc. Code § 695.010(a).
That property includes wages owed to the debtor by the
employer; California law allows a judgment creditor to
obtain an earnings withholding order that can be served on
the debtor’s employer. See Cal. Civ. Proc. Code §§ 706.021,
706.121. Farrell does not contest the underlying judgment,
the validity of the earnings withholding order obtained by
BECU, or its service on his employer, the federal
government. Therefore, the issue boils down to whether the
garnishment order was, as federal law requires, issued by “a
court of competent jurisdiction.” 5 U.S.C. § 5520a(a)(3)(A).
That was the case here. A California court issuing a
garnishment order need only have jurisdiction over the third-
party garnishee, not the debtor. See State v. Sec. Sav. Bank,
199 P. 791, 794 (Cal. 1921), aff’d, 263 U.S. 282 (1923).
Here, the garnishee is the federal government, which has
designated agents to accept service of process, 5 C.F.R.
§ 582.201, and has agreed to comply with state garnishment
orders, 5 C.F.R. § 582.305.
Although domestication of a state judgment in another
state is typically required to conduct post-judgment
enforcement proceedings in the latter state, see Baker by
Thomas v. Gen. Motors Corp., 522 U.S. 222, 235, 238–39
(1998), BECU never sought to conduct such proceedings in
either Indiana or Texas. Rather, BECU enforced the
California judgment through the California wage execution
order against the federal government, garnishing money
owed by the employer to Farrell. See 2 Witkin, Cal. Proc.
8 FARRELL V. BOEING EMPLOYEES CREDIT UNION
5th Juris., Garnishment § 248 (2020). Because there is no
dispute that the federal government was subject to the
jurisdiction of the California court and owed the wages
garnished, there was no violation of federal law. Therefore,
BECU did not need to domesticate the California judgment
in any other state to reach Farrell’s federal wages.
Our conclusion is supported by the opinion of the
Federal Circuit in Millard v. United States, 916 F.2d 1 (Fed.
Cir. 1990). In Millard, a retired Army member sued the
federal government after it garnished his wages pursuant to
a California wage assignment order. Id. at 4–5. Interpreting
California law and an analogous federal statute, the court
rejected Millard’s argument that domestication was required
because he actually received his pay outside of California.
Id. at 7. Rather, the court concluded, the garnishment was
valid because the California courts had jurisdiction over the
federal government, the garnishee. Id. (collecting cases).
B
Farrell’s remaining arguments are unpersuasive.
Farrell first relies on the prior panel’s observation about
“the lack of a clear statutory mandate allowing for interstate
garnishment of federal employees’ wages in the commercial
debt context, in contrast to the family law context.” Farrell,
761 F. App’x at 685 (citing 42 U.S.C. § 666(b)(9)). But,
although the observation is accurate, there are material
differences between the two statutory schemes. See
Barnhart v. Peabody Coal Co., 537 U.S. 149, 168 (2003)
(attributing significance to exclusions only if the provisions
are sufficiently similar). Unlike the garnishment statute at
issue in this case, 5 U.S.C. § 5520a, the relevant section of
the domestic relations statute, 42 U.S.C. § 666(b), applies to
all employers, not just the federal government. See, e.g.,
FARRELL V. BOEING EMPLOYEES CREDIT UNION 9
Hatcher v. Ala. Dep’t of Human Servs., 747 F. App’x 778,
780–81 (11th Cir. 2018) (per curiam). Because few
employers other than the federal government would be
subject to the jurisdiction of every state court, domestication
of child support and alimony judgments would typically be
required absent the provision in § 666 allowing for interstate
garnishment. Here, however, the lack of such a statutory
mandate is of no consequence because the federal
government is subject to the jurisdiction of every state after
the waiver of sovereign immunity. See Millard, 916 F.2d
at 7.
Farrell’s reliance on a comment by OPM, which
promulgates regulations under the statute, is similarly
unavailing. Instead of requiring domestication in situations
like the one at hand, the comment correctly rejects the
argument that the federal government must “determine
whether the court that issued the [garnishment] order had
lawfully acquired jurisdiction over the out-of-State obligor.”
Commercial Garnishment of Federal Employees’ Pay,
60 Fed. Reg. 13027-01, 13028 (Mar. 10, 1995) (citing
Morton, 467 U.S. at 828–30). The statute exempts the
federal government from liability for payments made
“pursuant to legal process regular on its face.” 5 U.S.C.
§ 5520a(g). And, in this case, there is no dispute that the
California court could issue the earnings withholding order
pursuant to the valid California judgment against Farrell.
III
We AFFIRM the judgment of the district court.