FDCPA § 3004(b)(2) Creates a Mandatory Debtor-Requested Transfer and Its Denial Requires Vacatur (No Harmless-Error Review)

1. Introduction

United States v. Liounis arises from the government’s effort to collect criminal restitution through a post-judgment writ of garnishment under the Federal Debt Collection Procedures Act (“FDCPA”). Peter Liounis—serving a lengthy sentence and owing approximately $3.8 million in restitution—objected to the garnishment of settlement proceeds associated with the September 11th Victims Compensation Fund and, crucially, requested transfer of the garnishment proceeding to the district where he then resided (the Eastern District of North Carolina).

The Eastern District of New York denied transfer, reasoning that transfer was not mandatory and could be refused for “good cause,” in part by invoking the FDCPA’s general provision allowing courts to “modify” enforcement procedures, 28 U.S.C. § 3013. The Second Circuit reversed on a threshold, structural question: Does 28 U.S.C. § 3004(b)(2) require transfer when a debtor timely requests it, and if transfer is wrongly denied, can the error be treated as harmless?

2. Summary of the Opinion

The Second Circuit (Menashi, J.) concluded that the statutory command in § 3004(b)(2) that the action “shall be transferred” leaves no discretion: if the debtor timely requests transfer within 20 days after receiving FDCPA notice, the court must transfer the proceeding to the district where the debtor resides.

The panel rejected the district court’s reliance on 28 U.S.C. § 3013 as a basis to deny transfer. Section 3013 authorizes courts to regulate the use of enforcement procedures; it does not override a specific venue-transfer mandate that restricts the court’s authority to hear the dispute in the first place.

Finally, drawing from the Supreme Court’s reasoning in Lexecon Inc. v. Milberg Weiss Bershad Hynes & Lerach, the panel held that denial of a mandatory venue transfer cannot be treated as harmless error. Because Liounis might no longer reside in the Eastern District of North Carolina, the court did not order direct transfer; instead, it vacated and remanded for the district court to entertain a renewed motion to transfer to the district where he currently resides.

3. Analysis

3.1 Precedents Cited (and How They Shaped the Decision)

• Lexecon Inc. v. Milberg Weiss Bershad Hynes & Lerach, 523 U.S. 26 (1998)
  The central interpretive and remedial anchor. The Second Circuit borrowed two key propositions: (i) “shall” in a venue/remand statute is a mandatory command “impervious to judicial discretion”; (ii) a categorical venue/remand violation is not curable via harmless error because that would drain the mandate of meaning. The panel treated § 3004(b)(2) as functionally parallel to Lexecon’s remand command.
• Bufkin v. Collins, 604 U.S. 369 (2025)
  Reinforced the interpretive baseline: “shall” means “must.” The panel used it to foreclose any discretionary reading of § 3004(b)(2).
• Olberding v. Illinois Cent. R. Co., 346 U.S. 338 (1953)
  Supported a strict approach to venue statutes: venue requirements are “specific and unambiguous,” not to be loosened for policy reasons. This helped the panel reject “efficiency” arguments for denying transfer.
• RadLAX Gateway Hotel, LLC v. Amalgamated Bank, 566 U.S. 639 (2012) (quoting Morales v. Trans World Airlines, Inc., 504 U.S. 374 (1992))
  Provided the canon that “the specific governs the general,” used to defeat the district court’s attempt to use the general procedural-modification authority in § 3013 to override the specific mandatory-transfer command in § 3004(b)(2).
• Varity Corp. v. Howe, 516 U.S. 489 (1996) (Thomas, J., dissenting)
  Cited through RadLAX
• United States v. Nash, 175 F.3d 440 (6th Cir. 1999)
  The Second Circuit embraced Nash’s core reading that the transfer language is mandatory if timely invoked—but rejected Nash’s willingness to apply harmless-error analysis. The panel distinguished Nash as not addressing Lexecon and as being driven by idiosyncratic facts (the debtor was transported at government expense, mitigating hardship).
• United States v. Peters, 783 F.3d 1361 (11th Cir. 2015)
  Supported both propositions adopted here: “shall” removes discretion, and the remedy for a wrongful denial is not filtered through harmless error.
• United States v. Brumbaugh, 139 F.4th 1077 (9th Cir. 2025)
  The most closely aligned circuit analysis. The Second Circuit adopted Brumbaugh’s view that § 3004(b)(2) restricts the court from hearing the case and requires transfer, and echoed its Lexecon-based reasoning that harmless-error review would nullify the statutory mandate.
• United States v. O'Brien, 851 F. App'x 236 (2d Cir. 2021)
  The district court relied on O’Brien for the idea that transfer is “not mandatory” and may be denied for good cause. Liounis is significant because it squarely rejects that discretionary conception in a precedential opinion, anchoring the analysis in the statute’s text and Supreme Court methodology.
• United States v. Furkin, 165 F.3d 33, 1998 WL 846873 (7th Cir. 1998)
  The panel acknowledged Furkin’s contrary unpublished approach (deferring to the rendering court for “logical” administration) but declined to follow it, concluding it “paid insufficient attention” to statutory text.
• Louisiana v. Callais, 146 S. Ct. 1131 (2026)
  Used to justify disregarding precedent that underweights statutory language—supporting the decision to discount Furkin’s reasoning.
• Giovinco v. Pullen, 118 F.4th 527 (2d Cir. 2024)
  Confirmed the standard of review: statutory interpretation is reviewed de novo.
• United States v. Yalincak, 853 F.3d 629 (2d Cir. 2017); United States v. Shkreli, 47 F.4th 65 (2d Cir. 2022)
  Established that a garnishment order is final and appealable, ensuring appellate jurisdiction.
• Small Bus. Ass'n v. Bensal, 853 F.3d 992 (9th Cir. 2017); United States v. Thornton, 672 F.2d 101 (D.C. Cir. 1982); United States v. Cohan, 798 F.3d 84 (2d Cir. 2015)
  Provided statutory and historical context: FDCPA as a comprehensive federal framework; prior reliance on state procedures; FDCPA’s availability to enforce restitution under the Mandatory Victims Restitution Act.
• FTC v. Nat'l Bus. Consultants, Inc., 376 F.3d 317 (5th Cir. 2004); United States v. Lawrence, 538 F. Supp. 2d 1188 (D.S.D. 2008); United States v. Ogburn, 499 F. Supp. 2d 28 (D.D.C. 2007); United States v. Kaye, 93 F. Supp. 2d 196 (D. Conn. 2000)
  Cited to illustrate the legitimate scope of § 3013 (e.g., modifying joinder mechanics or enforcement compliance mechanisms) while underscoring that venue transfer is categorically different.
• SEC v. Johnson, 650 F.3d 710 (D.C. Cir. 2011); In re HTC Corp., 889 F.3d 1349 (Fed. Cir. 2018); United States ex rel. Harvey Gulf Int'l Marine, Inc. v. Md. Cas. Co., 573 F.2d 245 (5th Cir. 1978)
  Reinforced the broader remedial principle: when a venue mandate is violated and the objection is preserved, the remedy is vacatur/reversal rather than harmless-error speculation.
• United States v. Am. Bell Tel. Co., 167 U.S. 224 (1897); Lackey v. Stinnie, 604 U.S. 192 (2025) (quoting Henson v. Santander Consumer USA Inc., 582 U.S. 79 (2017))
  Supplied the closing principle: courts must apply statutory text as written, even if inefficient; policy objections belong to Congress.