Mandatory Victims Restitution Act and Garnishment

On the morning of April 12, 2012, two Coast Guard employees were shot and killed at a Coast Guard station on Kodiak Island, Alaska. 

A federal district court jury found that their co-worker, James Michael Wells, had committed the murders.  Both murders were found to be first-degree murder under 18 U.S.C. § 1111.  The jury also found him guilty of murder of a federal employee, 18 U.S.C. § 1114 and two counts of using a firearm in relation to a crime of violence, 18 U.S.C. § 924(c).

The judge sentenced Wells to life in prison and ordered him to pay $1,921,640 in restitution under the Mandatory Victims Restitution Act (MVRA).

Wells had served a lengthy miliary career and then worked for over 20 years as a civilian mechanic, maintaining the radio antennas used to communicate with aircraft and vessels in the Bering Sea, which surrounds Kodiak Island.  The victims were also federal civilian employees of the Coast Guard and working at the same radar station.

The district court judge determined that restitution should be paid using garnishment of 80% of the monthly payments from his Thrift Savings Plan, military retirement benefits, civil service retirement benefits and disability benefits.

Wells argued, in opposition to the court’s tentative restitution order, that under the provision of the Consumer Credit Protection Act (CCPA), which are incorporated into the MVRA, his retirement and disability payments constituted “earnings,” which could not be garnished more than 25 percent. 15 U.S.C. § 1673.

Wells claimed that his retirement and disability payments constitute “earnings” for purposes of 15 U.S.C. § 1673, and that these funds cannot be garnished at more than 25%.

The District Court judge disagreed, holding that it had discretion under the All Writs Act (AWA) to order garnishment of a higher percentage of the monthly payments.

Wells appealed this order to the United States Court of Appeal for the Ninth Circuit in Anchorage, Alaska.  As the reader may know, California is part of the Ninth Circuit, so the ruling by the Ninth Circuit, although in Alaska, constitutes controlling law for federal restitution and garnishment orders in California.

The U.S. Court of Appeals for the Ninth Circuit agreed with Wells, vacated the restitution order and remanded the case for further proceedings.

The Ninth Circuit explained that the CCPA limits the maximum part of the aggregate earnings of an individual for any workweek which is subject to garnishment to 25 percent of his disposable income for that week.  The CCPA defines “earnings” as “compensation paid or payable for personal services, whether denominated as wages, salary, commission, bonus, or otherwise, and includes periodic payments pursuant to a pension or retirement program.”

The ACA provides that federal courts may issue all writs necessary or appropriate in aid of their respective jurisdiction.  The ACA codifies the court’s inherent authority to fashion appropriate modes of procedure, but does not enlarge a court’s jurisdiction when a statute specifically addresses the particular issue at hand.

Here, the MVRA created specific statutory requirements for garnishing earnings.  The ACA could not be used to sidestep those requirements. 

Thus, the district court judge was required to determine whether each of Wells’ benefit payment streams constituted “earnings” under the CCPA and what Wells’ disposable income was.

We present this summary for the reader because, while this case about restitution concerns federal law, it nonetheless demonstrates the strict guidelines that apply and how a federal judge errs in ignoring such authority.

Lastly, it merits mention, as a cautionary note, that Well argues that the restitution order violated the Fifth and Sixth Amendments because it was based on facts not found by a jury.  Federal case law precedent foreclosed that argument.  See United States v. Alvarez (9th Cir., 2016) 835 F. 3d 1180, 1185.  Wells also argued that the restitution order violated his Seventh Amendment right to a jury trial, but this was also foreclosed by precedent in United States v. Stanfill El (9th Cir., 2013) 714 F. 3d 1150, 1154.

For more information about restitution issues in general, please click on the following articles: