Appeal from the United States District Court for the Northern District of Indiana, Fort Wayne Division - No. 71 F 97 Jesse E. Eschbach, Chief Judge.
Fairchild, Chief Circuit Judge, Tone, Circuit Judge, and Perry, Senior District Judge.*fn*
PERRY, Senior District Judge.
This is an appeal from an order of the District Court granting summary judgment in favor of defendant below, The Kroger Company [hereinafter "Kroger"] and against plaintiff below, Peter J. Brennan, Secretary of Labor, United States Department of Labor [hereinafter "the Secretary"], in an action brought by the Secretary to enforce Title III of the Consumer Credit Protection Act, § 301 et seq. (P.L. 90-321, 82 Stat. 163), 15 U.S.C. § 1671 et seq. [hereinafter "the Act"]. By § 306 of the Act, 15 U.S.C. § 1676, the Secretary, acting through the Wage and Hour Division of the Department of Labor, is charged with enforcing Title III of the Act.
In June 1970, Kroger, a retail food dealer engaged in interstate commerce, hired one Johnnie Boyd as a railroad car gang employee. On September 22, 1970, an order [hereinafter "the first order"] was entered by the Justice of the Peace Court, Wayne Township, Allen County, Indiana, directing Kroger to apply the earnings of Boyd to the satisfaction of a judgment previously entered against him. The next day Kroger was served with the order and immediately thereafter began to withhold from Boyd's wages the maximum amount permitted by Indiana law. A month later, on October 22, 1970, the same Justice of the Peace Court entered a second order, directing Kroger to apply the earnings of Boyd to the satisfaction of another judgment, based on a debt unrelated to the debt which gave rise to the first order. Service on Kroger of the second order was accomplished on October 23, 1970, and, as a result, Kroger discharged Boyd effective October 31, 1970 in accordance with company policy and as permitted by the collective bargaining agreement then in force. The Justice of the Peace Court entered two distinct orders based on two separate debts and both orders were properly served on Kroger. Since the maximum amount permitted by law was being withheld from Boyd's wages pursuant to the first order, no actual withholding whatever was made from Boyd's wages pursuant to the second order. By their terms, both of the orders were in the nature of continuing liens against the earnings of Boyd, and the order which was first in time was entitled to full satisfaction before any withholding could be made for the purpose of satisfying the second order.
On September 13, 1971 the Secretary instituted this action, alleging that Kroger had discharged Boyd in violation of § 304(a) of the Act in that the discharge was by reason of the fact that Boyd's earnings had been subjected to garnishment for only one indebtedness. Section 304(a) of the Act, 15 U.S.C. § 1674(a), provides:
No employer may discharge any employee by reason of the fact that his earnings have been subjected to garnishment for any one indebtedness.
Thereafter Kroger moved for summary judgment, arguing that service of a second court order -- which under Indiana law created a continuing lien against the earnings of Boyd -- amounted to a second subjection to garnishment within the meaning of the Act, and that the restriction of § 304(a) was therefore inapplicable. The Secretary, on the other hand, contended that since there was not nor could there be any actual withholding under the second order until a first order had been fully satisfied, Boyd had been discharged because his earnings had been subjected to garnishment for only one indebtedness, in violation of § 304(a). In granting Kroger's summary judgment motion, the District Court equated service of the second order with subjection to garnishment within the meaning of the Act.
This case is before us for the resolution of a single issue. We must decide whether an employee's earnings have been subjected to garnishment for more than one indebtedness within the meaning of the Act by the service on an employer of a second garnishment order which rendered the employer accountable for the employee's earnings but which did not, because of the pendency of a superior lien, require the withholding of any of the employee's earnings.
The Secretary contends that both the language of Title III and the legislative history thereof demonstrate that the second order served on Kroger did not constitute a second subjection to garnishment which would justify Boyd's discharge. We agree.
Garnishment is defined in § 302(c) of the Act, 15 U.S.C. § 1672(c), as "any legal or equitable procedure through which the earnings of any individual are required to be withheld for payment of any debt." The Secretary argues, and we agree, that the use of the present tense, rather than the future tense, in the phrase "are required to be withheld" supports a construction that in order for earnings to "have been subjected to garnishment," those earnings must first be actually withheld pursuant to a garnishment order.
We turn now to the legislative history of Title III.*fn1 After taking many hours of testimony and studying hundreds of pages of discussion and data on the subject of garnishment, the House Banking and Currency Committee, and particularly Congresswoman Leonor Sullivan's Subcommittee on Consumer Affairs, decided that garnishment was a serious national problem and that at least a minimum national standard should be established for the garnishment of wages.*fn2 In the hearings on H.R. 11601, the proposed Consumer Credit Protection Act, Congressman Frank Annunzio was moved to say:
Representatives of three major steel corporations -- Inland, United States, and Republic -- testified in subcommittee hearings that garnishment deductions from the wages of their employees was a heavy, unwanted administrative expense.*fn4 These corporations, along with trade union groups, endorsed restrictions on wage garnishment.*fn5 In a letter to Congresswoman Sullivan, Secretary of Labor Willard Wirtz stated that there was a widespread opinion among judges, lawyers, economists and bankruptcy referees that there is a correlation between consumer bankruptcies and wage garnishments, and that a study in 1965 by the Administrative Office of the United States Courts showed that bankruptcies were highest where wage garnishments were least restricted.*fn6
In their report on H.R. 11601, the House Committee on Banking and Currency stated that as originally introduced, Title II of the bill [now Title III of the Act] would have provided for a blanket prohibition against the garnishment of wages, but testimony before the committee showed that a total prohibition would unduly restrict honest and ethical creditors and that, accordingly, the committee adopted an amendment [introduced by Congressman Seymour Halpern] which would restrict instead of prohibit garnishment, while prohibiting an employer from discharging any employee by reason of a single garnishment of the employee's wages. The committee stated that testimony and evidence received by the committee clearly established a causal connection between harsh garnishment laws and high levels ...