Skip to main content

FAIR DEBT COLLECTION PRACTICES ACT

Marx v. Gen. Revenue Corp.

in
Oral argument: 
November 7, 2012
Court below: 
United States Court of Appeals for the Tenth Circuit

In 2007, Petitioner Olivea Marx defaulted on her student loans. Her debt was assigned to Respondent General Revenue Corporation (GRC) for collection. In their attempts to collect the debt, Marx claims that GRC called her multiple times a day and sent a fax to her employer. Marx sued GRC under the Fair Debt Collection Practices Act (FDCPA), claiming that GRC’s attempts to collect her debt were acts of harassment in violation of the FDCPA. The District Court dismissed Marx’s claims and ordered her to pay GRC the costs of its defense. Marx argues that the FDCPA allows only an award of costs to defendants only if the plaintiff filed the suit in bad faith. In response, GRC argues that a court may award costs under Rule 54 of the Federal Rules of Civil Procedure as there is no prohibition under the FDCPA. If Marx wins, consumers face less risk of carrying the costs of defendants in lawsuits against abusive debt collecting practices. If GRC wins, debt collectors are less vulnerable to abusive negotiation tactics of attorneys who bring meritless claims that would be less expensive to settle than to litigate.

Questions Presented: 

The Fair Debt Collection Practices Act (FDCPA) provides that, "[o]n a finding by the court that an action under this section was brought in bad faith and for the purpose of harassment, the court may award to the defendant attorney's fees reasonable in relation to the work expended and costs." 15 U.S.C. § 1692k(a) (3). Federal Rule of Civil Procedure 54(d) provides that, "[u]nless a federal statute, these rules, or a court order provides otherwise, costs-other than attorney's fees should be allowed to the prevailing party."

The first question presented is whether a prevailing defendant in an FDCPA case may be awarded costs where the lawsuit was not "brought in bad faith and for the purpose of harassment." 2. The FDCPA defines "communication" as "conveying of information concerning a debt directly or indirectly to any person through any medium." 15 U.S.C. § 1692a(2). The statute generally bars debt collectors from communicating "in connection with the collection of any debt, with any person other than the consumer." § 1692c(b).

An exception to this bar allows a debt collector to "communicat[e]" with a debtor's employer solely to acquire "location information" about the debtor, but provides that a location information inquiry shall "not state that [the] consumer owes any debt" and not "indicate[] ... that the communication relates to the collection of a debt." § 1692b.

The second question presented is whether the FDCPA's strict limits on communications with third parties cease to apply when a debt collector, contacting a third party in connection with the collection of a debt, does not indicate the reason for the communication.

Issue

Whether a plaintiff who brings a good-faith claim under the FDCPA may be ordered to pay the defendant’s costs and attorney’s fees if they lose.

top

Written by: 
Dean Caruvana
Claire Holton-Basaldua
Edited by: 
Charlotte Davis
Additional Resources: 

Jerman v. Carlisle, McNellie, Rini, Kramer & Ulrich, L.P.A. (08-1200)

in

Oral argument: Jan. 13, 2010

Appealed from: United States Court of Appeals for the Sixth Circuit

FAIR DEBT COLLECTION PRACTICES ACT, BONA FIDE ERROR, MISTAKE OF LAW, ADEQUATE REPRESENTATION

In 2006, Respondents Carlisle, McNellie, Rini, Kramer & Ulrich, L.P.A. et al. (“Carlisle”) served Petitioner Karen Jerman with a notice of collection, which included a provision requiring the debtor to dispute the debt in writing.  Carlisle based the provision on their understanding of current Sixth Circuit case law interpreting the Fair Debt Collection Practices Act (“FDCPA”). The district court concluded that the FDCPA, which governs debt collection practices, does not require the plaintiff to dispute the debt in writing and consequently the notice violated the Act. However, the court granted Carlisle immunity under the FDCPA’s “bona fide error defense,” which protects debt collectors from penalties for unintentional violations of the FDCPA. Jerman contends that the defense does not include violations resulting from legal errors such as misinterpretations of the statute. Carlisle counters that the Sixth Circuit ruling should be upheld because the plain language of the statute includes legal errors under the defense. This decision will potentially resolve a circuit split on this issue.  It may also impact professional responsibility standards for attorneys involved in debt collecting and the incentives of individuals to bring suit against debt collectors where areas of the law are unsettled.

Syndicate content