FAIR DEBT COLLECTION PRACTICES ACT

Marx v. Gen. Revenue Corp.

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 as Framed for the Court by the Parties: 

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.

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