Stewart v. Travelers Corp.

• Citation: 503 F.2d 108
• Decision Date: 09 September 1974
• Docket Number: No. 72-2457,72-2457
• Parties: 21 Wage & Hour Cas. (BN 1089, 75 Lab.Cas. P 33,137 John H. STEWART, Appellant, v. The TRAVELERS CORPORATION et al., Appellees.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 108

503 F.2d 108

21 Wage & Hour Cas. (BN 1089, 75 Lab.Cas. P 33,137

John H. STEWART, Appellant, v. The TRAVELERS CORPORATION et al., Appellees.

No. 72-2457.

United States Court of Appeals, Ninth Circuit.

Sept. 9, 1974.

Hunsdon Cary Stewart (argued), Los Angeles, Cal., for appellant.

Kenneth W. Anderson (argued), of Gibson, Dunn & Crutcher, Los Angeles, Cal., for appellees.

OPINION

Before DUNIWAY and HUFSTEDLER, Circuit Judges, and KING, ^* District Judge.

SAMUEL P. KING, District Judge:

Appellant, Stewart, was discharged by The Travelers Insurance Company on January 15, 1971. Stewart subsequently complained to the United States Department of Labor that his dismissal violated 15 U.S.C. 1674(a) which forbids the discharge of an employee due to the garnishment of his wages for one indebtedness. ¹ When the Department of Labor refused to take action on his claim, Appellant filed a complaint in the district court for the Central District of California. Although private civil remedies are not expressly authorized for 1674(a) violations, ² Stewart requested as relief reinstatement, backpay, punitive damages, and attorney's fees. Judge Gray found that Congress did not intend such private actions for civil relief to be available under 1674, and dismissed the complaint. On appeal from that ruling, this court must decide whether private civil remedies may be implied for 1674(a) violations. We hold that such remedies must be implied; and accordingly, we reverse the district court's dismissal of Stewart's complaint.

Private civil remedies for violations of federal statutes have been implied, ³ even when criminal sanctions and administrative enforcement are expressly authorized. ⁴ In Burke v. Compania Mexicana de Aviacion, supra note 4, this court held that under 2 of the National Railway Act an individual discharged for union organizing could bring suit for reinstatement and damages, even though a criminal action by the U.S. attorney was expressly provided in the act. The Burke court stated: ⁵

In the absence of a clear congressional intent to the contrary, the courts are free to fashion appropriate civil remedies based on the violation of a penal statute where necessary to ensure the full effectiveness of the congressional purpose. See, e.g., Wyandotte Transportation Co. v. United States, 1967, 389 U.S. 191, 88 S.Ct. 379, 19 L.Ed.2d 407; J.I. Case Co. v. Borak, 1964, 377 U.S. 426, 84 S.Ct. 1555, 12 L.Ed.2d 423; Texas & Pacific R. Co. v. Rigsby, 1916, 241 U.S. 33, 36 S.Ct. 482, 60 L.Ed. 874. Where the interest asserted by the plaintiff is within the class that the statute was intended to protect, the harm of the type the statute was intended to forestall and the statutory criminal penalty inadequate to fully protect the asserted interest, a civil action for damages arises by implication. Wyandotte Transportation Co. v. United States, supra.

Based upon the allegations in his complaint, Stewart's interest as an employee is within the class that the statute was intended to protect, and his discharge due to one indebtedness is the type of harm which the statute was intended to forestall. The Appellees do not argue to the contrary. However, the Appellees do assert that there is ample evidence of a clear congressional intent against private actions for civil remedies for 1674(a) violations, and further that the criminal sanctions and agency enforcement explicitly authorized in Subchapter II of the Act adequately protect Stewart's statutory interest. ⁶

Appellees' position that Congress clearly intended not to have private civil relief available for 1674(a) violations is well argued, but unconvincing. ⁷ First although the passage of 1674 was influenced by an analogous New York law containing a limited civil remedy for discharges due to 'income execution,' the absence of such a limited provision in 1674 indicates at most that Congress did not want a limited civil remedy provision. It does not clearly suggest that Congress meant to exclude all private actions for civil relief. Second, Appellees point to a Congressional debate on whether there should be a criminal penalty for 1674(a) violations as proof that the authors of the statute assumed no civil remedies were to be available. See 114 Cong.Rec. 1839 (Feb. 1, 1968). While this debate manifests that Congress regarded criminal penalties as essential to effective enforcement, it does not evince a clear congressional intent to exclude civil remedies, which are not mentioned.

Finally, Appellees assert that because specific and limited civil remedies exist in 1640 of Subchapter I of the Act, the absence of a similar provision in Subchapter II shows the intent to exclude a private civil remedy for 1674. In fact, they are urging this Court to apply the doctrine of expressio unius est exclusio alterius-- the express authorization of a remedy in one section of a statute indicates that an omission of that remedy from other sections was intended by the legislature. While in the past some courts (including this one) have used this rule when denying implied actions under particular statutes, ⁸ the rule has been citicized. ⁹ Recently (as recognized by this court's holdings) the tendency is to limit the Expressio unius rule in favor of construing an act so as to effectuate its dominant purpose. ¹⁰

Appellees also argue that the criminal sanctions of 1674(b) and the Department of Labor enforcement mandate of 1676 adequately protect Stewart's statutory interests, citing Breitwieser v. KMS Industries, Inc., 467 F.2d 1391 (5th Cir. 1972). In Breitwieser, the Fifth Circuit affirmed a lower court's dismissal of a private action for damages under the Fair Labor Standards Act (FLSA) for the wrongful death of a child. While noting that the FLSA had elaborate criminal provisions which fulfilled the act's purpose and that state law afforded the plaintiff a limited monetary remedy, the court indicated that remedies are implied if no remedy exists, or if the remedy provided is 'grossly inadequate.' ¹¹ However, in this case, neither the existence of alternative remedies under the same statute or under state law, nor the fact that enforcement of the federal statute is expressly vested in an administrative agency overcomes the need to imply a private right of action for 1674(a) violations. ¹²

Whatever may be the rule of 'adequacy' elsewhere, we believe that when there is no clear congressional intent contrary to the implication of private civil remedies, the adequacy of a statute's express remedies (or alternatively, the necessity of implied private ones) must be determined according to whether those express remedies ensure the full effectiveness of the congressional purpose underlying the statute. In this sense, when the statute in question seeks to protect an individual's interest, it is not enough for it to have some enforcement mechanisms: the initial question is whether the statute's protection might be enhanced by allowing private civil relief. Of course, 'effectiveness' means more than deterrence, and the court must also consider whether implied private remedies might diminish the efficient and fair administration of the statute in question given the complexity of the act, and the interests of those regulated by it. ¹³

In this case, a primary purpose of 1674(a) is to protect against the hardships and disruptions resulting from employee discharges due to but one garnishment of wages. ¹⁴ The administrative and criminal remedies for 1674 violations do not provide maximum enforcement. The criminal sanctions cover only wilful violations: negligent violations are not covered, and proving wilfulness may well be difficult in the context of large corporate employers where the locus of particular decision-making is often elusive. Whatever deterrence 1674(b) creates, since it does not compensate the jobless and credit-stricken victim, it does not undo the very harm which the statute was intended to forestall. Enforcement by the Department of Labor is also problematic because any action by the Secretary is discretionary, not mandatory. ¹⁵

Furthermore, the implication of a private remedy under this statute will not upset the general administration of Subchapter II of the Act, ¹⁶ or unfairly affect the interests of employers. 1674(a) contains a relatively straight-forward mandate covering virtually all employers and employees, and compliance with the statute is hardly onerous since discharges may occur after one garnishment of wages. The issues raised in 1674(a) claim are simple ones, not requiring special knowledge of the economics or other intricacies of a particular industry or type of employer. To the extent that implying a private action for civil relief causes employers to be more careful before discharging individuals for one wage garnishment, it serves their own interests as well as those of creditors. As the court in Johnson v. Pike Corp. of America, 332 F.Supp. 490, 496 (C.D.Cal.1971), stated, 'Discharging an employee solely because his wages have been garnished once or several times benefits no one; the employer loses an otherwise capable employee and must expend considerable time and effort to train a replacement; the employee loses his source of income and may become dependent upon unemployment compensation or welfare; and the creditor is less likely to recover his claim.'

Therefore, the implication of private civil remedies is necessary to ensure the full effectiveness of the congressional purpose behind 1674(a), and we remand this case to the district court for trial on the merits. ¹⁷

* The Honorable Samuel P. King, United States District Judge, for the District of Hawaii, sitting by designation.

1 This case arises under Subchapter II (1671-1677, 'Restrictions on Garnishment') of the Consumer Credit Protection Act of 1968, 15 U.S.C.A. 1601-1681 (Supp. I, 1974) (hereinafter 'the Act'). 1674(a) provides: 'No employer may discharge any employee by reason of the fact that his...