UNITED STATES OF AMERICA, Plaintiff – Counter-Defendant – Appellee, v. VICKRAM BEDI and DATALINK COMPUTER PRODUCTS, INC., Defendants – Counter-Claimants – Appellants.*
No. 20-1955-cv
United States Court of Appeals For the Second Circuit
SEPTEMBER 30, 2021
AUGUST TERM 2020 ARGUED: MAY 20, 2021. * The Clerk of Court is directed to amend the caption as set forth above.
Before: WALKER, CABRANES, and WESLEY, Circuit Judges.
Datalink Computer Products, Inc. (Datalink) and its president, Vickram Bedi, appeal from a judgment of the Northern District of
On appeal, Bedi and Datalink principally argue that the Governmеnt may not use the procedures of the FDCPA to collect the unpaid wages. They contend that an administrative award of back wages is not an amount “owing to the United States” under the FDCPA, and that our circuit‘s contrary decision in NLRB v. E.D.P. Medical Computer Systems, Inc., 6 F.3d 951 (2d Cir. 1993), should be reconsidered. For the reasons that follow, we agree. We hold that the Government may not rely on the FDCPA to collect back wages on Ingvarsdóttir‘s behalf. We therefore REVERSE the judgment of the district court, overrule E.D.P., and restore the reach of the FDCPA to the limits enacted by Congress.
JESSE Z. GRAUMAN, Senior Attоrney (Stanley E. Keen, Deputy Solicitor for National Operations, Jennifer S. Brand, Associate Solicitor, Rachel Goldberg, Counsel for Appellate Litigation, on the brief), United States Department of Labor, Washington, District of Columbia, for Plaintiff – Counter-Defendant – Appellee United States of America.
JOHN M. WALKER, JR., Circuit Judge:
Datalink Computer Products, Inc. (Datalink) and its president, Vickram Bedi, appeal from a judgment of the Northern District of New York (Hurd, J.) granting summary judgment to thе Government on its claim to collect approximately $341,000 in back wages on behalf of Helga Ingvarsdóttir, a native of Iceland and former Datalink employee. The back wages were owing to Ingvarsdóttir under federal law governing the H-1B visa program, which requires employers to pay H-1B workers no less than the “prevailing” or “actual” wage in their area of employment. After Bedi and Datalink refused to comply with an order from the U.S. Department of Labor (DOL) to remit the wages, the Government brought this action to collect the unpaid wages under the Federal Debt Collection Procedures Act (FDCPA).1
On appeal, Bedi and Datalink principally argue that the Government may not use the procedures of the FDCPA to collect the unpaid wages. They contend that an administrative award of back wages is not an amount “owing to the United States” under the FDCPA, and that our circuit‘s contrary decision in NLRB v. E.D.P. Medical Computer Systems, Inc.2 should be reconsidered. For the reasons that follow, we agree. We hold that the Government may not rely on the FDCPA to collect back wages on Ingvarsdóttir‘s behalf. We therefore REVERSE the judgment of the district court, overrule
BACKGROUND
This appeal turns on a question of statutory interpretation: whether the FDCPA authorizes the United States to collect on an administrative order requiring a private employer to remit back pay to its former employee. While this question is a purely legal one, we begin with a brief discussion of the facts and procedural history to explain how this dispute originated.
From 1995 tо 2010, Bedi was the president and sole shareholder of Datalink, a small company that sold and serviced computers. In 2005, Bedi sought to hire an employee through the H-1B visa program to speak with customers and to handle administrative work. The H-1B visa program allows U.S. employers to bring temporary workers to the United States to perform “specialty occupation[s].”4 To participate in the program, employers must comply with certain labor standards, including by paying H-1B workers no less than the “actual” or “prevailing” wage in their area of employment.5 In this case, Bedi obtained approval from the Department of Homeland Security to hire Ingvarsdóttir, a native of Iceland. In doing so, he
Ingvarsdóttir‘s employment with Datalink did not go smoothly. According to Ingvarsdóttir, Bedi abused and manipulated her, paid her only “sporadic[ally],” and forced her to perform “continuous servant work” for him and his mother.6 The two аlso engaged in criminal activity. In November 2010, Bedi and Ingvarsdóttir were arrested and charged in New York State court in connection with an elaborate scheme to defraud one of Datalink‘s clients, Roger Davidson. Bedi pled guilty to first-degree grand larceny and was sentenced to three to nine years’ imprisonment. Ingvarsdóttir pled guilty to second-degree grand larceny and was sentenced to five years’ probation.
In March 2012, while Bedi and Ingvarsdóttir‘s criminal proceedings were pending, Ingvarsdóttir filed a complaint with the DOL‘s Wage аnd Hour Division alleging that she “receiv[ed] virtually no wages” from Datalink for her work from 2005 to 2010.7 The DOL has authority to determine whether an H-1B employer has failed to pay wages as required by the H-1B visa program.8 Pursuant to that authority, the agency issued a written determination on August 6, 2012, finding that Bedi and Datalink failed to pay Ingvarsdóttir $237,066.06 in wages required by the H-1B statute and regulations. The determination ordered them to pay the required back wages within 15 days, unless either party requested a hearing before an administrative law judge (ALJ).
Following the DOL‘s August 6 determination, Bedi and Ingvarsdóttir both requested hearings before an ALJ. The ALJ held
Bedi and Datalink failed to comply with the Administrative Order and did not remit back wages to Ingvarsdóttir. Ingvarsdóttir sought to collect on the debt in stаte court, but her action was dismissed because she failed to establish that the court could grant her that relief.11 Shortly thereafter, the Government initiated this action to collect the back wages under the FDCPA. As relevant here, the FDCPA authorizes the Government to recover judgment on a “debt,” which the law defines as “an amount that is owing to the United States” on account of several enumerated “source[s] of indebtedness to the United States.”12 Although the text of the Administrative Order awarded back wages to “Ingvarsdottir,” not “the Unitеd States,” the Government claimed that the unpaid sum fell within the definition of “debt” such that the Government could collect the wages on Ingvarsdóttir‘s behalf.
On January 29, 2018, Bedi and Datalink moved to dismiss the
On December 13, 2019, when the parties moved for summary judgment, Bedi and Datalink renewed their argument that Ingvarsdóttir‘s back wages were not “owing to the United States” under the FDCPA. The district court again rejected the argument, reiterating its prior conclusion “that the Second Circuit‘s decision in E.D.P. permitted the Government to use the FDCPA to pursue the back pay awarded to Ingvarsdóttir.”16 After disposing of Bedi and Dаtalink‘s remaining arguments, the district court entered judgment in favor of the Government.17 Bedi and Datalink timely appealed.
We review a district court‘s decision granting summary judgment de novo, drawing all inferences in favor of the nonmoving party.18 Summary judgment is appropriate only “if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.”19 The interpretation of a statute is a question of law, which we review de novo.20
On appeal, Bedi and Datalink argue that the district court erred in granting summary judgment to the Government because the Administrative Order awarding back wages was not a debt “owing to the United States” as required by the FDCPA.21 They urge us to overrule E.D.P. as contrary to the plain meaning of the statute and as inconsistent with the decisions of our sister circuits and the Supreme Court. In the alternative, Bedi and Datalink contend that, even if the FDCPA could apply to the Administrative Order, the district court erred by rejecting their affirmative defense of in pari delicto.22
Reviewing the district court‘s decision de novo, we agree that the FDCPA does not authorize the Government to collect on the Administrative Order and conclude that E.D.P. was wrongly decided. Accordingly, without objection by the active judges of the Sеcond Circuit, we overrule the majority opinion in E.D.P. and, in so doing, restore the reach of the FDCPA to the limits enacted by Congress.
When resolving a dispute over a statute‘s meaning, our principal task is “to afford the law‘s terms their ordinary meaning at the time Congress adopted them.”23 When the statutory text is plain and unambiguous, our “sole function” is “to enforce it according to its terms.”24 “Extrinsic materials have a role in statutory interpretation only to the extent they shed a reliable light on the enacting Legislature‘s understanding of otherwise ambiguous terms.”25 After all, “[i]f judges could add to, remodel, update, or detract from old statutory terms inspired only by extratextual sources and our own imaginations, we would risk amending statutes outside the legislative process reserved for the people‘s representatives.”26 We thus begin with the statutory text, exhausting “all the textual and structural clues” bearing on its meaning27 and construing each word “in its context and in light of the terms surrounding it.”28
The FDCPA “provides the exclusive civil procedures for the United States to recover a judgment on a debt.”29 The statute applies
(A) an amount that is owing to the United States on account of a direct loan, or loan insured or guaranteed, by the United States; or
(B) an amount that is owing to the United States on account of a fee, duty, lease, rent, service, sale of real or personal property, overpayment, fine, assessment, penalty, restitution, damages, interest, tax, bail bond forfeiture, reimbursement, recovery of a cost incurred by the United States, or other source of indebtedness to the United States, but that is not owing under the terms of a contract originally entered into by only persons other than the United States[.]31
Because our decision turns on the scope of the FDCPA‘s definition of “debt,” these two subparts are the focus of our analysis.
The text and structure of these provisions lead us to identify both a primary requirement and a limitation to the definition of “debt.” First, to qualify as a “debt,” the amount must always be “owing to the United States.”32 This primary requirement is present at the beginning of both subparts (A) and (B), and it carries through each of the twists and turns in the ensuing statutory text. The language that follows the phrases “on account of” describes permissible sources of indebtedness but does not modify the prior
We next consider the ordinary meaning of the phrase “owing to the United States” and its subsequent limitation in subpart (B). In the context of the provisions here, a reasonable reader would understand the phrase “owing to the United States” to place the United States in the position of a creditor seeking to recover a debt.37 In other words, the ordinary meaning of this phrase requires the United States to be the holder of the debt—i.e., the one “to whom [the] debt is owing”38—such that it has a direct financial stake in the debt
Applying the ordinary meaning of the statute to the question presented, we are unable to conclude that the DOL‘s award of bаck wages to Ingvarsdóttir created an indebtedness “owing to the United States.” Ingvarsdóttir, not the United States, was deprived of fair wages during the term of her employment, and the Administrative Order requires Bedi and Datalink to pay “Ingvarsdóttir,” not “the
The Government argues that Bedi and Datalink‘s debt is “owing to the United States” because the Government‘s collection efforts preserve fair wages in thе United States and vindicate the broader interests of the American public. It further argues that the limitation in subpart (B) presents no barrier to collection because Bedi and Datalink‘s debt derives from federal regulations rather than any employment agreement that Ingvarsdóttir may have signed. We do not dispute the premise of either argument: the Government may serve the public interest when it acts as a vehicle for Ingvarsdóttir to collect the wages she is due, and federal law requires H-1B employers to pay the requirеd wage regardless of whether the employee signs an agreement accepting lower compensation.45 But neither of these facts transform the debt itself into one that is “owing to the United States,” which is the statute‘s primary requirement.46 Thus, while we acknowledge the Government‘s strong interest in promoting compliance with the H-1B visa program, we conclude that the Government may not use the procedures of the FDCPA to collect the Administrative Order on Ingvarsdóttir‘s behalf.
Although the text is unambiguous, our conclusion is fortified by the legislative history. As the House report makes clеar, the FDCPA was intended to address the growing problem of delinquent debt owing to the United States, in great measure due to high rates of
The Government gives short shrift to this abundant historical evidence. It argues that, while the FDCPA certainly applies to debts that “fill the public coffers,” we should also consider the importance of effective collection for the enforcement of federal labor laws.51 According to the Government, “Congress surely did not intend to have DOL go through years of investigations, administrative hearings, and appellate review leading to final agency action to enforce a federal labor law, only to have enforcement of its own order . . . be left to the disparate collection regimes that the FDCPA was specifically enacted to avoid.”52 Again, the Government‘s argument misses the mark. Nothing in the legislative history indicates that Congress enacted the FDCPA to aid in the enforcemеnt of federal labor laws or to promote compliance with other obligations that are
Our decision also accords with an analogous decision of the Supreme Court. Nearly seventy years ago in Nathanson v. NLRB, the Supreme Court held that an award of back pay by the National Labor Relations Board (NLRB) was not a “debt owing [to] the United States” under the Bankruptcy Act.54 The Court explained that, while the Bankruptcy Act allowed the NLRB to file a claim for the back pay “as agent for the injured employees,” it did not follow that any debt owed was entitled to priority as a debt “owing [to] the United States.”55 The Court emphasized that any funds collected would not flow to the federal treasury, but rather to “wage claimants who were discriminated against by their employer.”56 And although the Government tries to distinguish Nathanson, its analysis is unpersuasive. The bankruptcy provisions addressed in Nathanson parallel the FDCPA in terms of both their text and the legislative purpose that Congress sought to achieve.57
Despite the plain meaning of the statute, its legislative history, and the Supreme Court‘s guidance in Nathanson, the Government has one last argument: in E.D.P., a split panel of our court held that the Government could rely on the FDCPA to collect an NLRB award of
We reject the Government‘s argument because E.D.P. was wrongly decided. Shirking both the statutory text and the weight of the legislative history, the majority in E.D.P. structured its opinion around a single sentence in a statement offered by Congressman Brooks, one of the bill‘s sponsors in the House. Specifically, the majority seized on the Congressman‘s pronouncement that the FDCPA “will not apply to obligations which begin as purely private loan or contract obligations.”59 From this, the majority reasoned that, if an obligation is not “purely private,” it must fall within the reach of the FDCPA.60 In other words, the majority construed the Congressman‘s statement as delineating the only condition required for the FDCPA to apply without according any significance to the primary requirement in the statutory text: that the debt to be enforced must be “owing to the United States.”61
Even if we were to set aside the plain text of the statute (which undoubtedly we must not do), the Congressman‘s statement simply cannot bear the weight the majority opinion assigned to it. In his full statement on the House floor, the Congressman explained that “[t]he definition of ‘debt’ was carefully written to make clear that the [A]ct
[I]f one of our constituents goes to his neighborhood bank or thrift and takes out a business or personal loan, that transaction is between him and the bank or thrift. . . . This is true even if the bank or thrift later fails and is taken over by Federal regulators. If the Federal Government seeks to recover these loan or contract obligations, it may do so in exactly the way it proceeded in the past; it is not eligible to use the new procedures in this [A]ct.63
Viewed in context, it seems clеar that Congressman Brooks was addressing nothing more than the limitation in subpart (B), which simply “pulls out from the definition those amounts owing to the United States that find their genesis in contracts where the United States was not an original party.”64 There is no evidence that the Congressman believed that the limitation dispensed with the primary requirement that all debts must be “owing to the United States” for the FDCPA to apply. Even if that result were the unstated aim of his remarks, the Congressman could not achieve on the House floor what he failed to attain in the tеxt itself. “After all, only the words on the page constitute the law adopted by Congress and approved by the President.”65
The Fifth Circuit endorsed a similar construction of the FDCPA in Sobranes, holding that the Government could not rely on the Act to
Of course, we recognize that E.D.P. is controlling precedent, and we readily acknowledge that a panel of our court is ordinarily “bound by the decisions of prior panels until such time as they are overruled either by an en banc panel of our Court or by the Supreme Court.”72 In this case, however, we have circulated our opinion to all active judges of the court prior to filing and received no objection.73 And, “[w]hile stare decisis is undoubtedly of considerable importance to questiоns of statutory interpretation, the Supreme Court ‘ha[s] never applied stare decisis mechanically to prohibit overruling . . . earlier decisions determining the meaning of statutes.‘”74 Our principal duty, we believe, is to faithfully interpret the law Congress enacted.75 Accordingly, we overrule E.D.P. as wrongly decided and inconsistent with the ordinary meaning of the FDCPA.
For the foregoing reasons, we REVERSE the judgment of the district court and REMAND with instructions to enter judgment in favor of Bedi and Datalink.
Notes
(A) a Federal corporation;
(B) an agency, department, commission, board, or other entity of the United States; or
(C) an instrumentality of the United States.