The opinion of the court was delivered by: E. THOMAS BOYLE, Magistrate Judge
Before the court is a motion by the Secretary of Labor ("Secretary"),
for an installment payment order pursuant to the Federal Debt Collection
Procedures Act of 1990 ("FDCPA"), 28 U.S.C. § 3204. The Secretary
seeks an order compelling the judgment debtors in this action, Vidtape,
Inc., Mohinder Singh Anand, and Satinder Singh Anand (collectively
referred to as "defendants"), to make monthly installment payments in the
amount of $19,693.64 to the Secretary until the outstanding judgment debt
plus the accrued post-judgment interest and costs, in the amount of
$236,323.62, have been satisfied. The defendants oppose this motion and
assert that they are only financially capable of making payments in the
amount of $3,500.00 per month. For the following reasons, the Secretary's
motion is granted.
The Secretary commenced this action on May 1, 1998, alleging that the
defendants, Vidtape, Inc., Inventive Technology Systems, Inc., Mohinder
Singh Anand, Arjan Singh Anand, and Satinder Singh Anand, had engaged in
numerous violations of the Fair Labor Standards Act ("FLSA"),
29 U.S.C. § 201 et seq. See Chao v. Vidtape, Inc., 196 F. Supp.2d 281,
284 (E.D.N.Y. 2002). Specifically, the Secretary alleged that
defendants: (1) failed to pay minimum wages; (2) failed to pay overtime
wages; (3) employed a child; (4) violated the "hot goods" provision of the
FLSA by putting into the stream of commerce goods produced in violation
of the FLSA; and (5) violated the FLSA's record-keeping provisions. See
id. The Secretary sought injunctive relief, back-pay, liquidated damages
and costs on behalf of 67 employees. See id.
A bench trial was held and the court found that defendants had wilfully
violated the FLSA's minimum wage, overtime, child labor, "hot goods," and
record-keeping provisions. See id. at 292-97. Accordingly, the court
ordered: (1) all defendants permanently enjoined from violating the
various provisions of the FLSA; (2) all defendants, with the exception of
Arjan Singh Anand, liable for $119,853.58 in back wages and $119,853.50
in liquidated damages; and (3) costs to be awarded to the Secretary. See
id. at 298-300.
Upon appeal to the Circuit, the decision of the district court was
modified and affirmed. See Chao v. Vidtape, Inc., 66 Fed. Appx. 261, 262
(2d Cir. 2003). The Circuit held that defendant Inventive Technology
Systems, Inc. should not have been held liable for back wages and reduced
the award of back pay and liquidated damages against Vidtape, Mohinder
Singh Anand and Satinder Singh Anand by $3,383.46, modifying the final
judgment to $236,323.62 plus post-judgment interest.
The Secretary brings the instant motion on the grounds that the
defendants have failed to make any payments since the judgment was
entered and affirmed by the Court of Appeals. The Secretary alleges that
the individual defendants brothers transferred assets to evade having
to pay the debt they were adjudged by the court to owe and that
conventional debt collection practices would be fufile in this action.
The defendants contend that they have done nothing improper and that they
are financially incapable of making payments in an amount greater than
$3,500.00 per month.
The Federal Debt Collection Procedures Act ("FDCPA"), 28 U.S.C. § 3001
et seq., "provides the exclusive civil procedures for the United States
. . . to recover a judgment on a debt." 28 U.S.C. § 3001 (a)(1). One such
civil procedure is the installment payment order, as described in
28 U.S.C. § 3204.
Section 3204 authorizes courts to issue installment payment orders: [I]
fit is shown that the judgment debtor
(1) is receiving or will receive substantial nonexempt
disposable earnings from self employment that are not
subject to garnishment; or (2) is diverting or
concealing substantial earnings from any source, or
property received in lieu of earnings.
28 U.S.C. § 3204(a). The Secretary contends that the testimony and
documents introduced at the evidentiary hearing held before the
undersigned on October 20, 2003, and continued on October 30, 2003,
satisfy both criteria of Section 3204 and that she is therefore entitled
to an installment
payment order against the defendants.
The types of debtors for which installment payment orders may be
obtained is limited under Section 3204. See Hon. James J. Brown, Judgment
Enforcement § 5.03[D] at 5-15 (2d ed. 1999).
The debtor must be self-employed like doctors,
accountants, and lawyers. The types of debtors would
also include the debtor who controls a family business
through a corporation to which the debtor provides
important services, but who may be paid no salary to
prevent creditors from garnishing the same. In turn,
the corporation pays for the debtor's expenses, such
as medical, insurance, car, and other types of support
Section 3204 sets forth the procedure by which a court may issue an
installment payment order. After the motion is made and notice is
provided to the debtor, a hearing must be held to determine the
appropriateness of the relief requested. In setting the payment amount,
"the court shall take into consideration . . . the income, resources and
reasonable requirements of the judgment debtor and the judgment debtor's
dependents, any other payments to be made in satisfaction of ...