Summary
holding that the Act "only preempts laws affording consumers less protection" than the Act itself
Summary of this case from Overton v. Advanced Recovery Sys.Opinion
Case No.: CV 03-4828 CAS (RZx)
August 25, 2003
CIVIL MINUTE ORDER
PROCEEDINGS: 1) Motion to Dismiss Plaintiffs Claims for Intentional Infliction of Emotional Distress and for Violations of the Anti-Attachment Provision ( 42 U.S.C. § 407) of the Social Security Act; and
2) Motion to Strike Punitive Damages Allegations in the Complaint
Defendant Allied International Credit Corporation ("Allied") moves to dismiss with prejudice the second and fourth claims for relief, respectively for intentional infliction of emotional distress and violation of the anti-attachment provision of the Social Security Act ( 42 U.S.C. § 407). Allied also moves to strike plaintiffs prayer for punitive damages on each of the second and fourth claims for relief on the ground that since the underlying claims for relief must be dismissed without leave to amend, there can be no basis for awarding punitive damages. Allied's motions are hereby denied.
A. Intentional Infliction of Emotional Distress
First, the intentional infliction of emotional distress claim is not completely preempted by the Federal Fair Debt Collection Practices Act, 15 U.S.C. § 1692 et seq. ("FDCPA"). Allied's reliance onThrasher v. Cardholder Svcs., 74 F. Supp.2d 691 (S.D. Miss. 1999), is misplaced. Thrasher has been overruled. Cases are legion that the FDCPA does not completely preempt state law. Joseph v. J. J. MacIntyre Cos., 238 F. Supp.2d 1158, 1169 (N.D. Cal. 2002); Virgil v. Reorganized M. W. Co., Inc., 156 F. Supp.2d 624 (S.D. Miss. 2001); Binion v. Franklin Collection Svcs., Inc., 147 F. Supp.2d 519 (S.D. Miss. 2001).
Allied further asserts that plaintiffs state law claims are in conflict with the limits of recovery set forth in FDCPA, and as such, the claim for intentional infliction of emotional distress and punitive damages must be dismissed by reason of the doctrine of conflict or field preemption.
Section 1692n of the FDCPA provides as follows:
[t]his title does not annul, alter, or affect, or exempt any person subject to the provisions of this title from complying with the laws of any State with respect to debt collection practices, except to the extent that those laws are inconsistent with any provision of this title, and then only to the extent of the inconsistency. For purposes of this section, a State law is not inconsistent with this title if the protection such law affords any consumer is greater than the protection provided by this title.
It appears to the Court that § I692n only preempts laws affording consumers less protection than that provided by FDCPA. A similar question was presented with regard to a claim for injunctive relief under Cal. Bus. Prof. Code §§ 17200 et seq. in Irwin v. United States District Court, 96 F. Supp.2d 968 (N.D. Cal. 1999). There, the Court noted as follows:
In the present case, defendants rely upon the doctrine of implied preemption. Citing cases that hold that the FDCPA does not provide for a private right of injunctive relief, defendants argue that the FDCPA preempts injunctive relief under state law. Defendants briefly refer to 15 U.S.C. § I692n, but omit any reference to its last sentence. That provision of the FDCPA provides, in its entirety:
This title does not annul, alter, or affect, or exempt any person subject to the provisions of this title from complying with the laws of any State with respect to debt collection practices, except to the extent that those laws are inconsistent with any provision of this title, and then only to the extent of the inconsistency. For purposes of this section, a State law is not inconsistent with this title if the protection such law affords any consumer is greater than the protection provided by this title.15 U.S.C. § I692n, emphasis added
Thus, there is an express statement of Congressional intent not to preempt state laws, such as Cal. Bus. Prof. Code §§ 17200 et seq., which may provide for greater protection, in the form of injunctive relief, than does the FDCPA.Irwin v. United States District Court, supra, at 968;see also Williams v. United States District Court for the Southern District of Ohio, 1999 U.S. Dist. LEXIS 12980 (S.D. Ohio 1999) ("Accepting for present purposes their premise that a claim of invasion of privacy does not afford greater protection than a claim under [FDCPA], the Court cannot agree that such a failure renders the state, common law claim inconsistent with FDCPA. The primary purpose of FDCPA is to protect consumers from abusive debt collection practices, including invasions of privacy [citations]. The common law tort of invasion of privacy . . . affords consumers the opportunity to obtain compensation for the harm they suffer, when their privacy has been invaded. Thus, the federal statute and the common law tort further the same purpose" and are not inconsistent.)
Accordingly the motion to dismiss the second claim for relief and the motion to strike punitive damages is denied.
B. Anti-Attachment Provision of the Social Security Act ( 42 U.S.C. § 407)
In her fourth claim plaintiff alleges that defendants violated section 407 by "threatening to garnish plaintiffs social security funds when they had no right or permission to do so." Complaint, ¶ 50. Section 407(a) exempts social security funds from "execution, levy, attachment, garnishment, or other legal process. . . ." Plaintiff asserts that the threat to garnish her social security benefits is covered by the statutory language "other legal process" in section 407(a). In support of this argument, plaintiff relies on King v. Schafer, 940 F.2d 1182 (8th Cir. 1991), which held that a threat by the Missouri Department of mental Health of legal process against representative payees of social security disability benefits for involuntarily committed patients was "other legal process" within the meaning of section 407(a).
Allied contends that the Supreme Court's recent holding in Wash. State Dept. of Soc. and Health Svcs., v. Guardian Estate of Keffeler, 123 S.Ct. 1017 (2003), overrules King and requires dismissal of plaintiff's fourth claim. In Keffeler, a case addressing whether the State of Washington's use of social security benefits received in its capacity as a representative payee of foster care children to reimburse itself for initial expenditures incurred on behalf of foster care children was an "other legal process" for purposes of section 407(a), the Supreme Court held:
Thus, "other legal process" should be understood to be process much like the processes of execution, levy attachment, and garnishment, and at a minimum, would seem to require utilization of some judicial or quasi-judicial mechanism, though not necessarily an elaborate one, by which control over property passes from one person to another in order to discharge or secure discharge of an allegedly existing or anticipated liability.Washington State Dept. of Social and Health Services, supra at 1024.
The Supreme Court's holding in Keffeler does not appear to require dismissal of plaintiff's fourth claim for relief. As quotedsupra, in Keffeler the Court held that the term "other legal process" should be understood as referring to the "utilization of some judicial or quasi-judicial mechanism."Keffeler, 123 S.Ct. 1024. However, the Court did not discuss, much less overrule, what appears to be a strong judicial precedent which spans at least four circuits and finds its root in Congressional intent — namely, that "the term `or other legal process' [encompasses] implied or express threats of formal sanctions, as well as the sanctions themselves." Moore v. Colautti, 483 F. Supp. 357, 368 (E.D. Pa. 1979) ("We agree with plaintiffs that Congress intended the term "or other legal process" to encompass implied or express threats of formal sanctions, as well as the sanctions themselves or formal legal machinery."); King, 940 F.2d at 1185 ("What [a party] cannot do, it cannot threaten to do" for purposes of § 407(a)). As such, the Court declines to find that the Supreme Court's holding inKeffeler requires dismissal of the fourth claim for relief. Accordingly, the motion to dismiss the fourth claim for relief is also denied.
The Court Keffeler noted that:
The poor fit between § 407(a) and respondents' argument points to the real basis of their objections to the reimbursement practice. At bottom, respondents' position and the State Supreme Court's holding reflect a view that allowing a state agency to reimburse itself for the costs of foster care in antithetical to the best interest of the beneficiary foster child. See 145 Wn.2d at 17, 32 P.3d at 275 (contending that a foster child "is better off with any payee other than the [department] because [the department] must provide foster case under state law regardless of whether it receives a reimbursement" (emphasis in original)); id., at 24, 32 P.3d at 278 ("We seriously doubt using [Social Security] benefits to reimburse the state for its public assistance expenditure is in all cases, or even some, `in the best interests of the beneficiary'" (quoting 20 C.F.R. § 404.2035(a))).Keffeler 123 S.Ct. at 1027-28.
CONCLUSION
The motions to dismiss and to strike are DENIED. Defendant shall file and serve its answer in twenty days.
IT IS SO ORDERED.