Split Widened: Can The Venue of Post-Judgment Garnishment Proceedings Violate The Fair Debt Collection Practices Act?

Per Smith v. Solomon & Solomon, P.C. (1st Cir. Apr. 24, 2012)

This unanimous opinion (including Retired Justice Souter) widens a split concerning the venue provisions of the Fair Debt Collection Practices Act (FDCPA).  In brief, the FDCPA requires debt collectors to file any suit "against a[] consumer" where the consumer either (a) "resides" or (b) signed the document giving rise to the debt.  15 U.S.C. 1692i.  Failure to do so can result in civil liability.

The split at issue does not concern initial suits against the consumer to reduce the debt to judgment.  Instead, it concerns the venue for post-judgment enforcement proceedings.  The venue provisions of the FDCPA are still relevant because the FDCPA defines "debt" as "any obligation or alleged obligation of a consumer . . . whether or not such obligation has been reduced to judgment."

The CA1 nonetheless joins the CA11 in holding that, under the relevant state law (Mass. and Ga.), post-judgment garnishment proceedings are not governed by the FDCPA's venue provisions, because it is not a suit "against [the] consumer" (wage-receiver), but rather are against the employer/wage-payor.  (p. 4, 6.)  The CA9 had earlier reached the opposite conclusion, holding that under California law a garnishment action was against the consumer.  (p. 5, 8).

I think the CA1 gets this exactly right.  But I am concerned about the extent to which these decisions make the availability of garnishment or other enforcement remedies depend on the vagaries of state law.  Why should a consumer in Massachusetts be subject to garnishment if his employment is in a different county, but not a consumer in California (or Ohio)?

I think there is another way to reach the right result, one that would have resulted in the CA9 also holding in favor of the collector  As the CA9 opinion notes, Congress passed the FDCPA venue provisions to ensure that consumers would not have to defend against suits in far-away, inconvenient courts.  But a garnishment suit--whether against the consumer or employer--filed wherever the consumer actually works cannot be inconvenient, as the consumer already commutes there daily.

In other words, I would treat "resides" in the venue provision as including every jurisdiction where the consumer would be subject to general (not specific--thats why the signature provision exists) personal jurisdiction.  If a consumer has a house in County A, but works in County B, his continuous and systematic presence in county B would dictate that he "resides"  in both for FDCPA purposes, and County B's exercise of jurisdiction surely would not offend notions of fair play.

True, the noun residence is ordinarily understood as a dwelling.  But--especially with the long hours at firms--a good argument could be made that I dwell both at work and home.  In the words of an old CA2 case:

Domiciliaries are those who have a fixed, permanent and principal home and to which, whenever absent, they always intend to return. At the opposite end of the scale are transients, those persons who are just passing through a locality. In between these notions of permanence and transience are residents. Residency means an established abode, for personal or business reasons, permanent for a time. 

Split Widened: Does U.S.S.G. 2G2.2(b)(3)(F) require knowledge?

Per United States v. Robinson (7th Cir. Apr. 9, 2013)

Although I am far more of a textualist than he, I am a fan of Judge Posner.  But this is one of the worst opinions from him that I have read.  It is internally contradictory, overlooks the obvious implications of the authorities it relies on, and creates an unnecessary make-work remand.

The split at issue is whether distribution has to be knowing for purposes of 2G2.2(b)(3)(F).  The text of the relevant commentary defining "distribution" and "distribution to a minor" provide:

"Distribution" means any act, including possession with intent to distribute, production, transmission, advertisement, and transportation, related to the transfer of material involving the sexual exploitation of a minor. Accordingly, distribution includes posting material involving the sexual exploitation of a minor on a website for public viewing but does not include the mere solicitation of such material by a defendant. 

"Distribution to a minor" means the knowing distribution to an individual who is a minor at the time of the offense

The CA10 held that knowledge was not required because (1) the text of the commentary is silent with respect to mens rea, (2) the usual presumption of a mes rea requirement, applicable to criminal laws, does not apply to Guidelines, and (3) reading a mens rea requirement into the definition of distribution would render the word "knowing" in the definition of distribution to a minor superfluous.

Here, the CA7 joins the CA8 (whose opinion is quite opaque) to reach the opposite conclusion, that knowledge is required.  (p.3.)  It provides only one reason for this conclusion:  that strict liability is disfavored in the criminal context.  In addition, Judge Posner rejects the argument (apparently not made) that knowledge of a peer-to-peer network's capabilities would make distribution "knowing," on the grounds that the criminal presumption of knowledge of the law does not apply in the Guidelines context.  Finally, Judge Posner rejects the CA10's superfluity analysis by reading the commentary's use of "knowing" to apply to the fact of the recipient's minority, rather than just to distribution.

As intimated in the introduction, I am inclined to agree with the CA10.  The relevant commentary is silent, the canon against superfluity applies, and the presumption of a mens rea does not apply to the guidelines.  With respect to Judge Posner's attempt to rebut the canon against superfluity, knowing should be read as modifying its closest noun, distribution, and not minor.

Moreover, Judge Posner's analysis is self contradictory in two respects.  First, he relies on the criminal law presumption of a mens rea, though numerous circuits have concluded that that presumption does not apply to the Guidelines, while rejecting the criminal law presumption of knowledge of the laws precisely because of the Guidelines context (though numerous circuits have applied this presumption to the Guidelines).  Second, Judge Posner notes that the Sentencing Commission has taken note of the split between the CA8 and CA10, and has stated "the guideline could be amended to better distinguish between more and less culpable distribution conduct.”  (p.5 (emphasis added).)  But he fails to draw the obvious conclusion:  That in the Sentencing Commission's view, unknowing conduct is still distribution, albeit less culpable.

What makes this all the worse, however, is that the opinion is reviewing for plain error.  Certainly, as the analysis above shows, the knowledge requirement is not plain.  (Judge Posner's opinion only introduces the plain error framework after undertaking what appears to be a de novo review of the Guidelines).  Plus, for a reversal on plain error, the defendant has the burden of showing that the error affected his substantial rights.  Here, I do not know how the Defendant could possibly have met that burden, where the ultimate sentence imposed was at the low-end of the guidelines range without taking the 2G2.2(b)(e)(f) enhancement into account.  Judge Posner entirely overlooks the burden of proof, and does not require the Defendant to offer any evidence that the sentencing judge might have or would have imposed a lesser sentence under a supposedly "proper" guidelines calculation.  This ultimately results in a make-work remand, unnecessarily burdening the judicial system..

Split Widened: Does Bankruptcy Stay a Tax Court Appeal?

Per Schoppe v. Comm'r (10th Cir. Mar. 28, 2013)

Never has my textualism been more difficult to follow.  I am 100% sure that Congress meant to accomplish what its words seemingly (but not too surely) preclude.  I strongly recommend that any legislation/statutory construction professors use excerpts of some of the historical (not necessarily current) cases on both sides of this split.  For example, the Ninth Circuit has a good discussion about when not to apply the canon against superfluity.

Even better, the issue is relatively simple to explain.  A bankruptcy filing automatically stays most proceedings against the debtor.  Courts have interpreted this stay to apply to cases where the debtor is the appellant, provided that he was the defendant in the underlying proceedings.

The split concerns whether the stay applies to debtor appeals of tax court proceedings, where the debtor must initiate the tax court proceedings against the Commissioner, but will never actually receive any affirmative relief, but only a potential reduction/elimination of a deficiency.  Are such proceedings "against" the debtor, so that they can be stayed?

Here, the CA10 joins the CA11 in saying no, the stay does not apply.  The CA9 said yes.  As indicated above, I have a really hard time figuring out where I would come out.

On one hand, it is entirely clear that Congress intended the stay to apply.  Indeed, the statute explicitly covers proceedings in the tax court, see 11 USC 362(a)(8), and there is no logical reason why lower court but not appellate proceedings should be covered.

On the other hand, it also fairly clear that the relevant statutory text does not cover tax court appeals.   The stay covers:

 the commencement or continuation . . . of a judicial, administrative, or other action or proceeding against the debtor . . ., or to recover a claim against the debtor that arose before the commencement of the case under this title.

Id. 362(a)(1).  For three reasons, this does not apply.  First, the tax court proceeding is initiated by the debtor, against the commissioner.  Second, the tax court proceeding is not a continuation of the administrative process against the debtor, because the Supreme Court has said that tax court proceedings are judicial proceedings not subject to deferential review.  Third, tax court proceedings are not to recover a claim against the debtor, because the court cannot afford the Commissioner affirmative relief (that's for the administrative mechanisms), just uphold or reject the deficiency calculation.

In the end, I believe I would concur dubitante (background) in whatever path my hypothetical panel chose.  Certainly, my textualism points me toward thinking (like the CA10 here) that the stay doesn't apply.  At the same time, the CA9 opinion on the other side is quite strong, and purposivism suggests that the stay should apply.  I could textually justify applying the stay in two ways:

1. Treating a tax court proceeding as a declaratory judgment action, with the debtor as the declaratory judgment plaintiff seeking to avoid potential liability.  Then, hypothetically realigning the parties (as permitted by the Supreme Court) to treat the tax court proceeding as against the debtor.  See Pub. Serv. Comm'n of Utah v. Wycoff Co., Inc., 344 U.S. 237, 248 (1952)
2. Treating the tax court appeal as the "continuation of a proceeding before the United States Tax Court," even though the appellate proceedings are no longer before the Tax Court.