                  United States Court of Appeals
                             For the Eighth Circuit
                         ___________________________

                                 No. 12-2449
                         ___________________________

                              United States of America

                         lllllllllllllllllllll Plaintiff - Appellee

                                            v.

                                    Joyce Ashcraft

                       lllllllllllllllllllll Defendant - Appellant
                                       ____________

                     Appeal from United States District Court
                 for the Northern District of Iowa - Cedar Rapids
                                  ____________

                               Submitted: June 5, 2013
                                Filed: October 9, 2013
                                    ____________

Before LOKEN, MELLOY, and BENTON, Circuit Judges.
                           ____________

MELLOY, Circuit Judge.

      Joyce Ashcraft appeals the district court's order denying her objection to the
garnishment of her disability payments. The district court ruled Ashcraft's disability
payments were not "earnings" within the meaning of the Consumer Credit Protection
Act (the "Act"), 15 U.S.C. § 1673(a), which limits garnishment of "earnings." We
reverse and hold Ashcraft's disability payments are "earnings" within the meaning of
the Act. We grant the government's motion to strike and deny all other pending
motions.

                                           I.

       In 2004, Ashcraft pleaded guilty to several criminal charges. She was
sentenced to a term of imprisonment and to restitution. She was released from
custody in November 2012. At some time prior to her incarceration, she worked for
Amana Refrigeration. Amana provided long-term disability insurance to its
employees through Principal Life Insurance Company ("PLIC"). Ashcraft's
employment with Amana aggravated a medical condition, rendering her unable to
work; as a result, Ashcraft receives disability payments from PLIC. Those payments
will continue until she reaches the age of sixty-five in November 2016.1 The
government does not dispute that the disability insurance providing Ashcraft's current
disability payments was provided by Amana in the course of Ashcraft's employment.

       In February 2012, the government sought to garnish Ashcraft's disability
payments pursuant to her restitution sentence. Ashcraft objected. Ashcraft argued
her disability payments are "earnings" within the meaning of the Act and are thus
subject to the Act's limitations on garnishment.

      The district court ruled Ashcraft's disability payments are not "earnings" within
the meaning of the Act and overruled her objection to garnishment. Ashcraft
appealed. On appeal, Ashcraft argues that the language of the Act is inclusive,
allowing for nonenumerated "periodic payments" to fall within the definition of
"earnings," and that the disability payments are the kind of periodic payments

      1
        Ashcraft stated and the district court found that Ashcraft's disability payments
would be reduced once she was released from custody because she would begin
receiving social security benefits. However, the amount of the disability payments
is not at issue on this appeal.

                                          -2-
intended to be protected by the Act. Ashcraft argues that her disability insurance was
part of her compensation from Amana and that her disability payments are considered
wages by the IRS. The government argues that Ashcraft's disability payments are not
"compensation paid or payable for personal services" as the Act requires and that the
Act does not expressly include disability payments within the definition of
"earnings."2

                                           II.

       We review the district court's interpretation of a statute de novo. Planned
Parenthood Minn., N.D., S.D. v. Rounds, 686 F.3d 889, 893 (8th Cir. 2012). To
interpret a statute, we examine both the clause at issue and the statute as a whole, as
well as "the objects and policy of the law, as indicated by its various provisions, and
give to it such a construction as will carry into execution the will of the Legislature."
Kokoszka v. Belford, 417 U.S. 642, 650 (1974). Where the statute's language is
unambiguous, we interpret the statute according to its plain language. United States
v. Allmon, 702 F.3d 1034, 1036 (8th Cir. 2012).


      2
        The government argues we must decide whether Ashcraft's disability
payments are "earnings" under the Act or "property" under the Federal Debt
Collection Practices Act, while Ashcraft argues that the categories of "earnings" and
"property" are not mutually exclusive. For purposes of this appeal, we need only
determine whether Ashcraft's disability payments are "earnings"; we do not determine
whether they are or may also be "property."

        Additionally, to the extent the government argues it is entitled to collect
restitution from Ashcraft free from the Act's restrictions based on the terms of
Ashcraft's plea agreement, that argument is meritless. The government itself admits
in its brief that its general garnishment powers are restricted by the Act. Further, to
the extent Ashcraft argues the government should not be permitted to garnish her
disability payments merely because she has made other restitution payments, that
argument is also meritless.

                                          -3-
      The Act states, in relevant part:

            (a) The term "earnings" means 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.

            (b) The term "disposable earnings" means that part of the earnings
      of any individual remaining after the deduction from those earnings of
      any amounts required by law to be withheld . . .

15 U.S.C. § 1672.

      (a) [T]he maximum part of the aggregate disposable earnings of an
      individual for any workweek which is subjected to garnishment may not
      exceed

             (1) 25 per centum of his disposable earnings for that week, or

             (2) the amount by which his disposable earnings for that week
             exceed thirty times the Federal minimum hourly wage . . . in
             effect at the time the earnings are payable,

      whichever is less.

15 U.S.C. § 1673.

       Whether disability payments are "earnings" within the meaning of the Act is
an issue of first impression for our court, and neither party points to a case from any
of our sister circuits offering a ruling on the present issue. While several courts have
previously interpreted the meaning of "earnings" under the Act, most of those courts




                                          -4-
considered whether pension payments and retirement savings constitute "earnings"3;
they did not address the Act's applicability to disability payments. However, two
prior cases are particularly relevant, and we introduce those cases before moving to
our analysis.

      First, courts interpreting the Act's definition of "earnings" rely heavily on
Kokoszka v. Belford, 417 U.S. 642 (1974). In Kokoszka, the Supreme Court
analyzed both the Act and the Bankruptcy Act and determined that income tax
refunds did not constitute "earnings." Quoting with approval the Second Circuit's
holding that "earnings" did not include "every asset that is traceable in some way to
such compensation," the Kokoszka Court stated:

      [T]he Consumer Credit Protection Act sought to prevent consumers
      from entering bankruptcy in the first place. . . . There is every indication
      that Congress, in an effort to avoid the necessity of bankruptcy, sought
      to regulate garnishment in its usual sense as a levy on periodic payments

      3
         Although the Act expressly includes payments pursuant to a pension or
retirement program, "district courts around the country have divided over whether
monthly pension-benefit payments constitute 'earnings' under the [Act]." United
States v. DeCay, 620 F.3d 534, 543–44 (5th Cir. 2010) (describing the split) (citing
United States v. Belan, No. 2:07-x-50979, 2008 WL 2444496, at *3 (E.D. Mich. June
13, 2008) ("[O]nce passed to a retirement account or annuity in the hands of the
employee, the funds in the account or annuity are not 'earnings' under the [Act]."),
and United States v. McClanahan, No. 3:03-00053, 2006 WL 1455698, at *3 (S.D.
W. Va. May 24, 2006) ("[U]nder clear statutory language . . . the Government may
garnish only 25% of the Defendant's pension.")). In United States v. Cunningham,
a district court within our circuit recently held that the Act's garnishment limitations
apply to pension payments. 866 F. Supp.2d 1050, 1060 (S.D. Iowa 2012) (concluding
that the Act's plain language "unambiguously includes payments made from a pension
or retirement account to an individual."). However, because the Act expressly
includes "payments pursuant to a pension or retirement program," 15 U.S.C.
§ 1672(a), those cases deal with a different question than the one Ashcraft's case
presents.

                                          -5-
       of compensation needed to support the wage earner and his family on a
       week-to-week, month-to-month basis.

Id. at 651.4


       Second, although the parties do not point to any federal district court or court
of appeals opinion addressing the present question, In re Conway, No. 03-11200-
MAM-7, 2003 Bankr. LEXIS 1988 (Bankr. S.D. Ala. Sept. 9, 2003) offers relevant
analysis. In Conway, a bankruptcy court concluded a debtor's disability insurance
payments were "earnings":


       4
         The Supreme Court noted that the legislative history of the Act "fully
support[s]" the view that "earnings" are "limited to periodic payments of
compensation and [do] not pertain to every asset that is traceable in some way to such
compensation." Kokoszka, 417 U.S. at 651 (second alteration in original). Some
courts interpret this to mean that only periodic payments, as opposed to lump sums,
can constitute "earnings." See, e.g., Pallante v. Int'l Venture Invs., Ltd., 622 F. Supp.
667, 669 (N.D. Ohio 1985) (relying on Kokoszka for the proposition that "[t]he
determinative factor in deciding whether severance pay is subject to the statutory
limitations is whether the monies are received in periodic payments. . . . It is when
payments are periodic that severance pay is intended to provide income similar to
current earnings." (citation and internal quotation marks omitted)). The Court's
discussion of "periodic" occurs during an analysis of the legislative history. The
statute Congress passed does not restrict itself to periodic payments. It includes
payments "denominated as wages, salary, commission, bonus, or otherwise,"
contemplating a wide variety of payment structures. Indeed, bonuses (and payments
in the "otherwise" category) are frequently not periodic. Congress defines the only
test as whether the payment is "compensation paid or payable for personal services."
15 U.S.C. § 1672(a).

       In any event, to the extent the periodic nature of the payments helps to establish
them as "compensation paid . . . for personal services," Ashcraft's disability payments
were "periodic payments of compensation needed to support the wage earner and
[her] family on a week-to-week, month-to-month basis." Kokoszka, 417 U.S. at 651.

                                          -6-
      "Earnings" under the federal statute include "periodic payments pursuant
      to a pension or retirement plan." 15 U.S.C. § 1672(a). Disability
      payments serve the same purpose and, like retirement or pension
      payments, are replacement income. The payments are taxed like wages.
      The payments are an employee benefit like a pension . . . . [Debtor's
      employer] paid all costs of the plan . . . [and] [t]he plan states that "the
      long term disability plan provides financial protection for you by paying
      a portion of your income while you are disabled . . . ." The plan, as this
      language and the employer funding make clear, is an income
      replacement vehicle for [ ] employees. As a benefit of employment, this
      Court concludes it is "other compensation" to employees paid to them
      as a part of their earnings for personal services performed in the past.

Id. at *20–22. See also Rousey v. Jacoway, 544 U.S. 320, 331 (2005) (identifying
various types of benefit plans, including "disability, illness, or unemployment
benefit[s]" and noting that "[t]he common feature of all of these plans is that they
provide income that substitutes for wages earned as salary or hourly compensation.").

       We turn now to our analysis. Based on the Act's plain language, Ashcraft's
disability payments constitute "earnings." By defining "earnings" as "compensation
paid or payable for personal services, whether denominated as wages, salary,
commission, bonus, or otherwise," the Act prioritizes the character of the payment
over its label. Thus, although Ashcraft's evidence that the IRS lists her disability
payments as wages may support her claim, whether or not the disability payments are
labeled as wages is not the central issue; the central issue is whether the disability
payments are "compensation paid or payable for personal services." We hold they
are.

      Ashcraft receives the disability payments through her former employer. They
are payments designed to function as wage substitutes; they are not merely "traceable
in some way" to Ashcraft's compensation, Kokoszka, 417 U.S. at 651, but are
themselves a direct component of the compensation Amana provided to Ashcraft in


                                          -7-
return for the personal services Ashcraft rendered to Amana. They are "compensation
paid or payable for personal services" that are "denominated . . . otherwise" by her
former employer as disability payments rather than as wages or salary.

       The government's argument that Ashcraft receives the payments precisely
because she cannot render "personal services" due to her disability incorrectly focuses
on the time the payments are received rather than the character of the payments.
Simply because the disability payments are delayed—simply because Amana received
Ashcraft's personal services before Ashcraft began receiving her disability
payments—does not take the payments out of the category of compensation. The
disability payments constitute "'other compensation' to employees paid to [her] as a
part of [her] earnings for personal services performed in the past." Conway, 2003
Bankr. LEXIS 1988, at *22.

                                         III.

       For the reasons stated above, we conclude Ashcraft's disability payments are
"earnings" within the plain meaning of the Act and are therefore subject to the Act's
limitations on garnishment.
                       ______________________________




                                         -8-
