This opinion will be unpublished and
may not be cited except as provided by
Minn. Stat. § 480A.08, subd. 3 (2000)
STATE OF MINNESOTA
IN COURT OF APPEALS
Kenneth Edward Murray,
Minnesota Department of Corrections,
Filed February 5, 2001
Ramsey County District Court
File No. C6007910
Kenneth E. Murray, 4150 Regent Avenue North #21, Robbinsdale, MN 55422 (pro se appellant)
Mike Hatch, Attorney General, Kari Jo Ferguson, Assistant Attorney General, Suite 1100, 445 Minnesota Street, St. Paul, MN 55101-2128 (for respondent)
Considered and decided by Hanson, Presiding Judge, Lansing, Judge, Kalitowski, Judge.
U N P U B L I S H E D O P I N I O N
The district court granted summary judgment against Kenneth Murray's claims that the Department of Corrections (DOC) failed to withhold a portion of Murray’s funds to be used as personal savings, failed to withhold a portion of Murray’s funds to pay his court-ordered fines, and withheld federal income taxes from his wages at an unlawful rate. On undisputed facts, the district court correctly applied the law, and we affirm.
F A C T S
During his incarceration at the Minnesota Correctional Facility in Moose Lake from September 1997 to March 2000, Kenneth Murray worked with the Minnesota Correctional Industries (MINNCOR) manufacturing fishing lures. The MINNCOR program is certified under the Department of Justice’s Prison Industry Enhancement Certification Program (PIECP), which focuses on reducing inmate idleness and improving the safety of prison environments. See 18 U.S.C. § 1761 (2000); Prison Industry Enhancement Certification Program Guideline, 64 Fed. Reg. 17000 (April 7, 1999). In accordance with PIECP procedures, MINNCOR inmates sign up for the program, produce goods sold in interstate commerce, and receive gross wages at prevailing rates.
As part of his participation in MINNCOR, Murray signed a Voluntary Agreement of Participation in which he agreed to have his taxes withheld at an allowance rate of one exemption and unmarried. Murray did not fill out or file a federal tax withholding form (W-4) for his participation in MINNCOR. From 1997 through mid-1998, the DOC, as provided by state law, deducted amounts from Murray’s wages for federal and state taxes, costs of confinement, compensation to victims of crime, and court-ordered fines. After June 1998, the DOC discontinued deducting from Murray’s wages amounts for court-ordered fines.
On his release from prison in March 2000, Murray filed a complaint against the DOC alleging that the DOC was liable to him for (1) failing to withhold from his wages a portion for a personal savings account, (2) discontinuing withholding funds to pay his court-ordered fines, and (3) unlawfully withholding his federal income taxes at a rate of one exemption. The DOC and Murray both moved for summary judgment. The district court denied Murray’s motion and granted the DOC’s motion. Murray appeals the summary judgment on each of his claims.
D E C I S I O N
On appeal from summary judgment, a reviewing court examines whether there are any genuine issues of material fact and whether the district court erred in applying the law. State by Cooper v. French, 460 N.W.2d 2, 4 (Minn. 1990). Appellate review evaluates the evidence in the light most favorable to the party against whom judgment was granted. Fabio v. Bellomo, 504 N.W.2d 758, 761 (Minn. 1993). The construction of a statute is a question of law subject to de novo review. Hibbing Educ. Ass’n v. Pub. Employment Relations Bd., 369 N.W.2d 527, 529 (Minn. 1985).
Murray first argues that the DOC is liable for its failure to set aside one-half of his earnings to be used as a savings plan in accordance with Minn. Stat. § 243.88. This argument fails for two reasons. First, by its terms, Minn. Stat. § 243.88 applies only to inmates working for private corporations that are leasing DOC facilities for the purpose of establishing and operating factories. Minn. Stat. § 243.88, subd. 1-2 (2002) (limiting statute’s applicability to “[a]ny corporation operating a factory or other business or commercial enterprise under this section” and noting that the set-aside applies to inmates employed “as authorized by this subdivision”). It is undisputed that Murray worked for MINNCOR, which is not a private corporation leasing DOC facilities.
Second, in arguing that he was entitled to have 50% of his earnings set aside, Murray relies on an outdated DOC policy that provided that half of an inmate's wages would be set aside for his or her benefit upon release. This policy was in effect in the early 1990s, but was discontinued in 1994—three years before Murray began working for MINNCOR. For both reasons, summary judgment on this claim was proper.
Murray's second argument is that the DOC failed to withhold money from his earnings to pay his court-ordered fines. This argument also fails. Minn. Stat. § 243.23, subd. 3 (2002), allows the Commissioner of Corrections to deduct from inmates’ wages, according to an established priority, amounts for court-ordered restitution and court-ordered fines. From September 1997 through June 1998, the DOC withheld money for Murray’s court-ordered fines because, due to an error in the computer program, the DOC was under the mistaken impression that Murray owed the higher priority court-ordered restitution. When the DOC implemented a new computer program in 1998, the DOC was able to distinguish between money owed as court-ordered restitution and money owed as court-ordered fines. The DOC discontinued deducting money from Murray’s wages to pay the much lower priority court-ordered fines. Murray benefited from the limitations of the pre-1998 computer system, but the DOC is under no obligation to perpetuate the error in withholding priorities.
Furthermore, the DOC was not only correcting a computer error by discontinuing the withholding for Murray's fines, it was also modifying its deduction allocation to comply with federal law governing deductions from PIECP inmates’ wages. Federal law governing PIECP mandates that total deductions from a PIECP inmates’ wages not exceed 80%. 18 U.S.C. § 1761(c). This 80% cap on deductions includes federal, state, and local taxes; reasonable cost of room and board; and a minimum 5% and maximum 20% contribution to funds established for victims of crimes. Id. at (A)-(D).
The law limits the deductions to only those listed, which does not include a deduction for court-ordered fines. See 18 U.S.C. § 1761(c)(2) (noting that the 80% deduction “shall be limited” to deductions for taxes, cost of confinement, support of family, and contributions to victims’ funds). To deduct an additional amount to pay Murray’s court-ordered fines would violate the 80% cap and would violate federal law limiting the deductions to only those listed. Therefore, the DOC is not liable to Murray for discontinuing the deduction of court-ordered fines from his wages summary judgment on this claim was proper.
Finally, Murray argues that the DOC is liable to him for its failure to comply with federal tax regulations requiring employees with no valid W-4 form to have their taxes withheld at a rate of zero exemptions. Murray’s argument is as follows: (1) under an IRS private letter ruling, he is an employee for purposes of calculating federal income tax; (2) he never filled out a W-4 form for his work with MINNCOR; (3) because he was an employee and he never filled out a W-4 form, he was entitled to have his wages withheld at a rate of zero exemptions; and (4) by failing to withhold his wages at a rate of zero exemptions, the DOC is now liable to Murray for the difference in the tax refunds he would have received and those he did receive. See 26 U.S.C. § 3401(e) (2001) (defining “number of withholding exemptions claimed” as zero if there is no W-4 form in effect); Priv. Ltr. Rul. 7707282130A (July 28, 1977) (explaining that inmates are employees for the purpose of federal taxes on gross earnings if they participate voluntarily in specific work programs and are paid a market wage). It is undisputed that Murray did not fill out a W-4 form for MINNCOR and that the DOC withheld income taxes from his paychecks at a rate of one exemption and unmarried.
Murray’s argument is misdirected in that he relies on an IRS procedure to attempt to recover monies from the DOC. Although it is true that the DOC potentially has a compliance problem with the IRS because of its failure to have Murray fill out the W-4 form, this compliance problem does not create a cause of action that would allow recovery from the DOC for money paid for federal taxes. It was not unreasonable for the DOC to require inmates to have their taxes withheld at a rate of one exemption and unmarried.The practical effect of this withholding rate is that the DOC provided Murray with a larger percentage of his paycheck up front, which was then available to help defray his cost of confinement, leaving a smaller amount for a tax refund. Murray’s lawsuit attempts to reallocate to his own pocket a percentage of the money that was used to fund his cost of confinement.
Furthermore, Murray’s argument is unavailing because he waived his right to pursue a cause of action against the DOC when he signed the Voluntary Agreement of Participation. We agree with Murray's contention that the Voluntary Agreement of Participation is not a valid substitute for the W-4 form. But that only means that the DOC could not file the Voluntary Agreement of Participation with the IRS. It does not mean that his waiver of the right to claim zero exemptions is unenforceable. The agreement specifically provides that, as part of his participation in PIECP, he consents to having his federal, state, and local taxes withheld at a rate of zero exemptions and unmarried. Murray signed the agreement, a staff person witnessed it, and we perceive no invalidity. Summary judgment was proper on this claim.