A copy of the opinion in Ray v. McCullough Payne & Haan, LLC is available at: Link to Opinion.
A debt collector filed a collection action. In compliance with the FDCPA’s venue provision, the debt collector brought that action in Fulton County, Georgia, where the debtor resided.
After obtaining a judgment against the debtor in that action, the debt collector initiated a garnishment proceeding against the debtor’s bank to collect on the judgment. As required by Georgia law, it brought the garnishment action in Cobb County, Georgia, where the bank, as the garnishee, was located.
In response to the garnishment action, the debtor filed suit against the debt collector alleging that it violated the FDCPA by bringing the garnishment action in a judicial district other than the one in which the debtor resided or signed the underlying contract.
The district court dismissed the debtor’s complaint. The debtor appealed. The only question on appeal was whether the FDCPA’s venue provision applies to post-judgment garnishment proceedings.
As you may recall, the venue provision in the FDCPA requires that “[a]ny debt collector who brings any legal action on a debt against any consumer shall . . . bring such action only in the judicial district or similar legal entity — (A) in which such consumer signed the contract sued upon; or (B) in which such consumer resides at the commencement of the action.” 15 U.S.C. § 1692i(a)(2).
The Eleventh Circuit first noted that there was no binding precedent on this issue in its circuit because previous rulings on this issue were unpublished and unpublished opinions are nonbinding. The Court did not analyze the unpublished decision in its circuit, but instead highlighted three decisions in other circuits on this issue.
First, the Court summarized the facts and reasoning of the First Circuit’s opinion in Smith v. Solomon & Solomon, PC, 714 F.3d 73 (1st Cir. 2013), which involved post-judgment enforcement proceedings under Massachusetts’ trustee process. The First Circuit found that the Massachusetts trustee process action is geared toward compelling the trustee to act, not the debtor. The First Circuit concluded that because post-judgment enforcement proceedings under Massachusetts law did not qualify as a legal action “against the consumer,” the FDCPA venue provision did not apply to them.
Next, the Court analyzed the Eighth Circuit’s opinion in Hageman v. Barton, 817 F.3d 611 (8th Cir. 2016), which involved post-judgment enforcement proceedings under Illinois law. Following the First Circuit’s lead, the Eighth Circuit looked to the state statutes governing Illinois’ garnishment proceedings. Like Massachusetts, Illinois requires the judgment-creditor to direct its summons against the consumer’s employer and required the employer to respond to and comply with any garnishment order. The Eighth Circuit concluded that because a post-judgment garnishment action under Illinois law did not amount to an action against the consumer, the FDCPA’s venue provision did not apply to it.
The Court then briefly mentioned the Ninth Circuit’s opinion in Fox v. Citicorp Credit Services, Inc., 15 F.3d 1507, 1515 (9th Cir. 1994), concerning the venue provisions in the FDCPA under Arizona law. The Eleventh Circuit found the Fox opinion to hold little persuasive value because the opinion did not discuss the “against any consumer” language in the FDCPA or whether its venue provision applied to actions directed at third parties rather than consumers.
Turning to the present matter, the Eleventh Circuit first noted that the FDCPA’s venue provision language states that it only applies to legal actions “against any consumer.” 15 U.S.C. § 1692i(a). Consequently, whether the provision applies to Georgia garnishment proceedings depends on whether those proceedings are legal actions “against any consumer.”
The Eleventh Circuit held that a Georgia garnishment proceeding was not an action “against a consumer” under Georgia law. In support, the Court cited the procedural requirements of the garnishment process in Georgia. In Georgia, the judgment creditor directs its summons to the garnishee (not the consumer), Ga. Code § 18- 4-8(a), and it requires the garnishee (not the consumer) to file an answer, Ga. Code § 18-4-10(a). Moreover, the governing statute specifically provides that “[a] garnishment proceeding is an action between the plaintiff [judgment-creditor] and garnishee.” Ga. Code § 18-4-15(a).
The Court found that the process is fundamentally an action against the garnishee, not the consumer, despite the fact that in Georgia a consumer may become a party to the garnishment by filing a claim with the clerk of court. Consequently, the Eleventh Circuit held, the FDCPA’s venue provision did not apply to post-judgment garnishment proceedings under Georgia law and the debtor’s FDCPA claim failed.
After stating its ruling, the Eleventh Circuit found it appropriate to discuss the debtor’s arguments to the contrary. First, the Court did not find persuasive the debtor’s canon of construction argument. In short, the Court did not agree that the term “against any consumer” modified only the term “debt” and not the term legal action. The Court believed instead that “against any consumer” modified “legal action,” and the FDCPA venue provision applied to a “legal action . . . against any consumer.”
The Court also did not adopt the debtor’s policy argument. The debtor argued that excluding post-judgment garnishment proceedings from the FDCPA’s coverage undermines the venue provision’s purpose to prevent debt collectors from filing suits in distant and inconvenient forums, thereby depriving consumers of the opportunity to defend themselves against debt-collection lawsuits. The Eleventh Circuit was satisfied that a consumer would not lose his opportunity to defend himself from a debt-collection lawsuit because the original suit to collect on the debt had to occur in a forum that was convenient for the consumer. The Court pointed out that the Federal Trade Commission’s reading of the FDCPA supported this reasoning.
Last, the Eleventh Circuit did not find persuasive the debtor’s federalism argument that the meaning of federal law should not hinge on state law definitions. The Court asserted that although federal law governs the interpretation of a federal statute, federal law sometimes adopts state law as the federal rule of decision. This is more than appropriate when a national rule is unnecessary to protect the statute’s federal interests. The Court found in this matter that the interpretation of the venue provision is consistent with the statute’s purpose.
Accordingly, the Eleventh Circuit affirmed the district court’s dismissal.