USA v. Decay

• Decision Date: 20 September 2010
• Docket Number: No. 09-30218.,09-30218.
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. Kerry DeCAY; Stanford Barre, Defendants-Appellants, Louisiana Sheriffs Pension and Relief Fund, Garnishee-Appellant.
• Court: U.S. Court of Appeals — Fifth Circuit

620 F.3d 534

UNITED STATES of America, Plaintiff-Appellee,

v. Kerry DeCAY; Stanford Barre, Defendants-Appellants,Louisiana Sheriffs Pension and Relief Fund, Garnishee-Appellant.

No. 09-30218.

United States Court of Appeals,Fifth Circuit.

Sept. 20, 2010.

Peter M. Mansfield (argued), Stephen Andrew Higginson, Asst. U.S. Attys., New Orleans, LA, for U.S.

Kerry DeCay, Ayer, MA, pro se.

Scott R. Bickford, Regina O. Matthews (argued), Martzell & Bickford, New Orleans, LA, for Barre.

Robert E. Tarcza (argued), Tarcza & Associates, L.L.C., New Orleans, LA, Craig Lester Williams, Bossier City, LA, for Louisiana Sheriffs Pension and Relief Fund.

Appeals from the United States District Court for the Eastern District of Louisiana.

Before JONES, Chief Judge, and KING and HAYNES, Circuit Judges.

HAYNES, Circuit Judge:

Kerry DeCay, Stanford Barre, and the Louisiana Sheriffs Pension and Relief Fund (“LSPRF”) appeal the district court's order granting garnishment of DeCay's contributions to and Barre's monthly benefits from state pension funds held by the LSPRF. We conclude that the United States may garnish DeCay's and Barre's retirement benefits to satisfy a criminal restitution order, but that the United States is limited to garnishing twenty-five percent of Barre's monthly pension benefit. Accordingly, we REVERSE the district court's entry of the final garnishment orders as to Barre, AFFIRM as to DeCay, and REMAND for proceedings consistent with our holding.

I. Factual & Procedural Background

Kerry DeCay and Stanford Barre pleaded guilty to one count each of mail fraud, conspiracy to commit mail fraud, and obstruction of justice for their roles in a scheme to defraud the City of New Orleans (“the City”). At sentencing, the district court determined that the City had suffered an injury compensable under the Mandatory Victims Restitution Act (“MVRA”), and ordered DeCay and Barre to pay $1,064,362.15, jointly and severally, in restitution. After judgment was entered, the United States moved for writs of garnishment under the Federal Debt Collection Procedures Act (“FDCPA”) seeking seizure of the defendants' interests in their pension funds to satisfy the restitution order. The district court found that the statutory prerequisites to garnishment were satisfied, see 28 U.S.C. § 3205(b), and issued the writs of garnishment to the LSPRF.

The LSPRF answered the garnishment orders by stating that DeCay currently was eligible only for an immediate lump-sum withdrawal of the $77,898 he had contributed toward his retirement and that Barre was currently receiving a monthly pension benefit of $2,464.72. The LSPRF asserted that the pension benefits were exempt from seizure under federal and Louisiana law and that enforcement of the writs against it as garnishee would violate the Tenth Amendment to the United States Constitution. The LSPRF also argued that, to the extent that garnishment is proper, the United States failed to follow the appropriate formal procedures to withdraw DeCay's employee contributions. Regarding Barre, the LSPRF argued that even if garnishment were proper, the Consumer Credit Protection Act (“CCPA”) limits the United States' right to garnish Barre's pension to twenty-five percent of his monthly benefit.

DeCay, proceeding pro se, adopted the LSPRF's brief. Barre also objected to the writ of garnishment against him, asserting that the Tenth Amendment precludes the United States from garnishing his pension benefits and, in the alternative, that the CCPA prohibits the United States from garnishing more than twenty-five percent of his pension benefits.

The district court overruled the appellants' objections to the garnishment writs and held that the United States could garnish the entire amount of DeCay's contributions to the LSPRF ($77,898), as well as the full amount of the monthly benefits paid by the LSPRF to Barre ($2,464.72). Accordingly, the district court entered final orders of garnishment compelling the LSPRF to immediately pay the United States $77,898, representing the present cash-out value of DeCay's employee contributions to the LSPRF, as well as 100% of any future distributions of pension funds due to Barre. The LSPRF and Barre filed motions for a new trial or to alter or amend the judgment. DeCay adopted the LSPRF's motion. The district court denied the motions.

The LSPRF, DeCay, and Barre filed the instant appeal. ¹ They assert that the garnishment orders violate federal and Louisiana law, including the Tenth Amendment to the United States Constitution. The appellants argue in the alternative that, if garnishment is proper, the district court erred by not requiring the United States to complete certain formalities before withdrawing DeCay's employee contributions and by allowing the United States to garnish the full amount of Barre's monthly pension benefit.

II. Standard of Review

We review a district court's construction and application of a statute de novo. United States v. Williams, 602 F.3d 313, 315 (5th Cir.2010); see also United States v. Anderson, 559 F.3d 348, 352 (5th Cir.2009) (stating that this court reviews the constitutionality of a federal statute de novo). Similarly, the “preemptive effect of a federal statute is a question of law that we review de novo.” Franks Inv. Co. LLC v. Union Pac. R.R. Co., 593 F.3d 404, 407 (5th Cir.2010).

III. Standing

Before we address the merits of the appellants' arguments, we must determine whether the LSPRF has standing to assert arguments on appeal. United States v. Holy Land Found. for Relief & Dev., 445 F.3d 771, 779 (5th Cir.2006) (“When standing is placed in issue in a case, the question is whether the person whose standing is challenged is a proper party to request an adjudication of a particular issue and not whether the issue itself is justiciable.”) (internal quotation marks and citation omitted). The United States asserts that the LSPRF lacks standing to object to the writs of garnishment because the LSPRF does not have a personal interest in the retirement benefits and thus has not suffered an injury-in-fact.

In addressing a plaintiff's standing, the Supreme Court has required:

(1) “injury in fact,” by which we mean an invasion of a legally protected interest that is (a) concrete and particularized, and (b) actual or imminent, not conjectural or hypothetical; (2) a causal relationship between the injury and the challenged conduct, by which we mean

that the injury fairly can be traced to the challenged action of the defendant, and has not resulted from the independent action of some third party not before the court; and (3) a likelihood that the injury will be redressed by a favorable decision, by which we mean that the prospect of obtaining relief from the injury as a result of the favorable ruling is not too speculative.

Ne. Fla. Chapter of the Assoc. Gen. Contractors of Am. v. City of Jacksonville, 508 U.S. 656, 663-64, 113 S.Ct. 2297, 124 L.Ed.2d 586 (1993) (internal citations and quotation marks omitted). The Supreme Court further has observed that the nature and extent of the facts that must be alleged to establish standing “depends considerably upon whether the plaintiff is himself an object of the action ... at issue. If he is, there is ordinarily little question that the action or inaction has caused him injury, and that a judgment preventing or requiring the action will redress it.” Lujan v. Defenders of Wildlife, 504 U.S. 555, 561-62, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992). But when “a plaintiff's asserted injury arises from the government's allegedly unlawful regulation (or lack of regulation) of someone else, much more is needed.” Id. at 562, 112 S.Ct. 2130.

Of course, the LSPRF did not come to court seeking relief. The United States obtained an order compelling the LSPRF to turn over funds in its possession representing any interest DeCay and Barre may have in any property subject to the LSPRF's control, thus drawing the LSPRF into the instant litigation. The writs of garnishment compel the LSPRF to take particular action, and the LSPRF asserts that the ordered action is unconstitutional under the Tenth Amendment and, as to DeCay, subjects it to potential double exposure in the future. In essence, the LSPRF is saying to the court “you can't make me do this.” Having been brought before the court involuntarily by another party, we conclude that the LSPRF has the ability to say it cannot be the object of such court actions. ² Accordingly, the LSPRF, as the object of the writ of garnishment and as a sovereign entity, has standing to assert that the United States lacks the constitutional authority to compel it to release the funds. ³ See Lujan, 504 U.S. at 561, 112 S.Ct. 2130; Holy Land Found., 445 F.3d at 780. ⁴

We need not decide whether the LSPRF has standing to raise the remaining objections to garnishment because DeCay and Barre plainly have standing to assert exemptions to the garnishment of their property.

Because DeCay and Barre raise the same objections to garnishment that the LSPRF makes, this court has jurisdiction to decide the case. See Arlington Heights v. Metro. Hous. Dev. Corp., 429 U.S. 252, 263-64, 97 S.Ct. 555, 50 L.Ed.2d 450 (1977) ( “In the ordinary case, a party is denied standing to assert the rights of third persons. But we need not decide whether the circumstances of this case would justify departure from that prudential limitation ... [f]or we have at least one individual plaintiff who has demonstrated standing to assert these rights as his own.”); see also Horne v. Flores, --- U.S. ----, 129 S.Ct. 2579, 2592, 174 L.Ed.2d 406 (2009) (“Because the superintendent clearly has standing to challenge the lower courts' decisions, we need not consider whether the Legislators also have standing to do so.”). Having concluded that the appellants possess standing to challenge the final orders of garnishment, we now turn to the merits of this dispute.

IV. Merits

The MVRA makes restitution...