Jack McCabe v. City of Eureka, Missouri

664 F.2d 680, 25 Wage & Hour Cas. (BNA) 190, 115 L.R.R.M. (BNA) 5122, 1981 U.S. App. LEXIS 15656

• Court: Court of Appeals for the Eighth Circuit
• Decided: November 30, 1981
• Docket: 80-2103
• Status: Published

Opinions

ROSS, Circuit Judge.

This appeal raises the single issue of whether an implied private right of action exists under 15 U.S.C. § 1674(a) of the Consumer Credit Protection Act. Jack McCabe appeals the dismissal of his complaint following the district court’s findings that no implied private right of action exists, 500 F.Supp. 59.

The pertinent statutory provisions provide:

§ 1674. Restriction on discharge from employment by reason of garnishment.

(a) No employer may discharge any employee by reason of the fact that his earnings have been subjected to garnishment for any one indebtedness.

(b) Whoever willfully violates subsection (a) of this section shall be fined not more than $1,000, or imprisoned not more than one year, or both.

§ 1676. Enforcement by Secretary of Labor

The Secretary of Labor, acting through the Wage and Hour Division of the Department of Labor, shall enforce the provisions of this subchapter.

Nothing in the relevant statutes expressly grants or denies a private right of action. Thus, the question is whether there is an implied right of action and this question must be analyzed under the test set forth in Cort v. Ash, 422 U.S. 66, 95 S.Ct. 2080, 45 L.Ed.2d 26 (1975). The factors to be considered under Cort v. Ash are (1) whether the plaintiff is a member of the class of persons for whose benefit the statute was enacted; (2) whether the legislature has implicitly or explicitly manifested any intent to create or deny such a remedy; (3) whether it is consistent with the underlying purpose of the legislative scheme to imply such a remedy; and (4) whether the cause of action is traditionally a creature of state law such that inferring a cause of action based solely on federal law would be inappropriate. Id. at 78, 95 S.Ct. at 2087.

The complaint filed in this case alleged that McCabe was discharged by the City of Eureka because of a possible garnishment of his wages. Subchapter II of the Consumer Credit Protection Act addresses restrictions on garnishment and in 15 U.S.C. § 1671(a)(2) Congress found the purpose for such restrictions included the fact that garnishment “frequently results in loss of employment by the debtor, and [results in] disruption of employment, production, and consumption * * Based on this statement of purpose, it is clear that McCabe is a member of the class of persons for whose benefit the statute was enacted.

As to the second factor to be considered under Cort v. Ash, we first note that the legislative history contains no explicit reference to the - denial or the creation of a private right of action. However, the legislative history does state that the enforcement of the garnishment provisions of the Consumer Credit Protection Act “is vested in the Secretary of Labor.” H.R.Rep.No. 1040, 90th Cong., 2d Sess. reprinted in [1968] U.S.Code Cong. & Ad.News 1962, 1978.

Additionally, Subchapter I of the Consumer Credit Protection Act was enacted on the same date and as part of the same law, Public Law 90-321, as Subchapter II. Sub-chapter I is also referred to by its short title as the Truth in Lending Act. This court in Jordan v. Montgomery Ward & Co., 442 F.2d 78, 81 (8th Cir.), cert. denied, 404 U.S. 870, 92 S.Ct. 78, 30 L.Ed.2d 114 (1971) found that the expressed right of private action provided for in Part B (originally Chapter 2) of Subsection I (Truth in Lending Act) weighed heavily against implying a private right action under Part C of Subsection I which deals with credit advertising. In Jordan the court also noted that “the legislative history evinces that Congress intended that the Act be enforced primarily by administrative agencies.” Id. at 81.

The absence of any reference to a private right of action in Subchapter II when viewed in light of Congress’ detailed provision of such a right under Part B of Sub-chapter I (15 U.S.C. § 1640) is in our opinion an implicit manifestation of an intent to deny such a remedy. And the lack of a private remedy when considered with the command of 15 U.S.C. § 1676, that the Secretary of Labor shall enforce section 1674 is consistent with the “legislative scheme” of the Act.

Similar reasons to those proffered here were adopted by the Fifth Circuit in finding an implied denial of a right of private action under 15 U.S.C. § 1674(a). See Smith v. Cotton Brothers Baking Co., 609 F.2d 738 (5th Cir.), cert. denied, 449 U.S. 821, 101 S.Ct. 79, 66 L.Ed.2d 23 (U.S. Oct. 7, 1980). However, prior to the Supreme Court’s decision in Cort v. Ash, the Ninth Circuit found that a private remedy should be implied under 15 U.S.C. § 1674(a). See Stewart v. Travelers Corporation, 503 F.2d 108 (9th Cir. 1974). We decline to follow the Ninth Circuit’s views because their basic reasoning hinged on a proposition that does not appear to comply with Cort v. Ash principles. That proposition was that “ ‘[i]n 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.’ ” Stewart v. Travelers Corporation, supra, 503 F.2d at 110, citing Burke v. Compania Mexicana de Aviacion, 433 F.2d 1031 (9th Cir. 1970).

The final factor to be considered under Cort v. Ash relates to whether the cause of action is traditionally a creature of state law. One of Congress’ reasons for placing restrictions on garnishment was because “[t]he great disparities among the laws of the several States relating to garnishment have, in effect, destroyed the uniformity of the bankruptcy laws and frustrated the purposes thereof in many areas of the country.” 15 U.S.C. § 1671(a)(3). This language can possibly be viewed as recognition by Congress that their legislation affected a traditionally state area of law but is not necessarily determinative of whether a cause of action based solely on federal law would be inappropriate.

For these reasons we refuse to imply a private right of action under 15 U.S.C. § 1674(a). The judgment of the district court dismissing the action for failure to state a claim upon which relief may be granted is affirmed, each party to pay its own costs on appeal.