Decided: June 26, 2013
The Fourth Circuit Court of Appeals reversed and remanded with instructions to quash the writ of garnishment filed by the Carpenters Pension Fund of Baltimore, Maryland (“the Fund”) against the Maryland Department of Mental Health and Mental Hygiene (the “Department”). The court concluded that a federal proceeding that seeks to attach the property of a state to satisfy a debt, whether styled as a garnishment action or an analogous common law writ, violates the Eleventh Amendment.
In May 2007, the Fund filed suit against Tao Construction Company, Inc. (“Tao”) alleging deficient employer contributions. Tao failed to answer and the district court entered a default judgment against Tao. The Fund filed an enforcement action to collect on the judgment. When the Fund could not locate any assets owed by Tao, it discovered that Tao’s CEO had contracted with the Department to perform construction work. The district court issued a writ of garnishment against the Department for amounts due to Tao. The Department moved to quash the writ on grounds of sovereign immunity and Maryland public policy.
The Fourth Circuit of Appeals addressed whether the jurisdictional shield of the Eleventh Amendment insulates a state from a writ of garnishment under Federal Rule of Civil Procedure 69(a). Because the Eleventh Amendment gives the states immunity from “suit,” the court first considered whether a writ of garnishment constituted a “suit” against the state. The court followed the test in the Supreme Court case Central Virginia Community College v. Katz, and examined whether the procedural means and substantive end of the instant writ of garnishment involve the compulsory exercise of federal jurisdiction over the state of Maryland. The procedural inquiry measures the degree of coercion exercised by the federal court in compelling the state to attend. The substantive inquiry measures whether the proceeding demands something from the state by the institution of process in a court of justice. In this case, the garnishment proceeding procedurally resembled a conventional “suit.” It was essentially a suit by the debtor against the garnishee for the use and benefit of the attaching creditor. A garnishee who fails to file an answer to the writ risks default judgment. A proceeding that encumbers the property of a sovereign unless it participates amounts to, what the Fourth Circuit deemend, unconstitutional “coercion exercised by the federal court in compelling the state to attend.” It is immaterial that the Department was in fact indebted to Tao because the Eleventh Amendment is a matter of jurisdiction, not liability. Therefore, the court concluded the garnishment action was a “suit” in the procedural sense.
The court also found that the garnishment action satisfies the substantive criteria of a “suit” because it demanded recovery from the state treasury. Courts have upheld this principle to prevent the disruption on government functions that would attend the garnishment of public funds held in the Treasury. Even though the relevant cases mostly concern the immunity of the federal government from post-judgment attachment, the court found no reason why a state should not enjoy this immunity as well. The court also rejected the Fund’s characterization of its garnishment action as an in rem proceeding. The court also went on to say that the characterization was immaterial, so long as the action was ultimately seeking recovery from the Maryland treasury. Therefore, the court concluded the garnishment action was also a suit in the substantive sense. Because the garnishment action was a “suit” under the Eleventh Amendment, the Department was entitled to sovereign immunity. Therefore, the court quashed the Fund’s writ of garnishment.
– Sarah Bishop