Author Question: Garnishment. John Johnson worked for the street department of the Town of Trail Creek. In August ... (Read 74 times)

wrbasek0 · **on:** Jun 24, 2018

Garnishment. John Johnson worked for the street department of the Town of Trail Creek. In August 1989, Trail Creek received notice from a court that one of Johnson's creditors had received a court judgment against Johnson for an unpaid debt. The notice also stated that Johnson's wages would be subject to garnishment, pending a determination of whether Trail Creek owed any obligations or credits (for example, wages) to Johnson that could be garnished. Johnson was fired two days after this notice was received. Johnson brought an action against the town, the president of the town council, and the superintendent of the town's street department (the defendants), alleging, among other things, that the defendants had violated federal law because he was dismissed as a result of the notice of possible garnishment. The defendants moved to dismiss Johnson's complaint on the ground that they could not have violated the law because Johnson's wages were not actually being withheld at the time of his dischargein other words, no garnishment proceeding had yet occurred. Must wages actually be withheld before a garnishment proceeding can be held to have occurred? How should the court rule?

Question 2

In order to meet the requirements of the Howey test, an investor must not have direct control over the work that makes the investment a success or failure.
a. True
b. False
Indicate whether the statement is true or false

Sweetkitty24130 · **Reply #1 on:** Jun 24, 2018

Answer to Question 1

Garnishment
The federal district court denied Trail Creek's motion to dismiss the complaint. Federal law provides that no employer may discharge any employee by reason of the fact that his earnings have been subjected to garnishment for any one indebtedness 15 U.S.C. Section 1674(a). The law also defines garnishment as meaning any legal or equitable procedure through which the earnings of any individual are required to be withheld for payment of any debt 15 U.S.C. Section 1672(c). To determine whether any legal or equitable procedure had occurred prior to Johnson's dismissal, the court turned to the Indiana procedure for garnishment of wages, which involves two steps: First, the employer is notified of a judgment against its employee, after which the employer must attend a court proceeding to determine whether the employer has an obligation owing to the judgment debtor. Second, if the employer is found to have such an obligation, the court may order the payment of obligation to the judgment-creditor. The court concluded that the notice received by Trail Creek was part of a legal procedure that required Johnson's earnings to be withheld for a debt. Therefore, if Johnson could prove that he had been discharged because of the notice of possible garnishment, Trail Creek would be liable for violating 15 U.S.C. Section 1674(a).

Answer to Question 2

TRUE