Jerman v. Carlisle, McNellie, Rini, Kramer & Ulrich, L.P.A.
Issues
Whether a mistake of law made by a debt collector allows it to avoid liability by asserting a bona fide error defense under the Fair Debt Collection Practices Act.
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.
Questions as Framed for the Court by the Parties
Whether a debt collector's legal error qualifies for the bona fide error defense under the Fair Debt Collection Practices Act ("FDCPA"), 15 U.S.C. § 1692.
The Fair Debt Collection Practices Act (“FDCPA”) governs debt-collection policies but also protects debt collectors who unintentionally violate the Act. A debt collector may avoid liability for an FDCPA violation by “show[ing] by a preponderance of evidence that the violation was not intentional and resulted from a bona fide error notwithstanding the maintenance of procedures reasonably adapted to avoid any such error.” 28 U.S.C. § 1692(k)(c).