Jerman v. Carlisle, McNellie, Rini, Kramer & Ulrich, L.P.A.


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.

Oral argument: 
January 13, 2010

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).

In 2006, the respondent firm ("Carlisle") filed a complaint seeking to foreclose on petitioner Karen Jerman’s property under a mortgage she had through now-defunct Countrywide Home Loans. The complaint, which was served to Jerman, included a notice under the FDCPA that Jerman had 30 days to dispute the debt and foreclosure "in writing,” or Carlisle would assume the debt was valid. Jerman disputed the debt in writing five days after receiving the complaint, and Countrywide notified Carlisle that Jerman had in fact paid off the mortgage; Carlisle dismissed its complaint.

Following the dismissal, Jerman sued Carlisle in the Northern District Court of Ohio for violating the FDCPA by requirng a written dispute of the debt, as the statute does not require such disputes in writing. The district court granted summary judgment for Carlisle, ruling that although the firm had violated the FDCPA with its notice, the violation, based on a mistake of law, was a "bona fide error," shielding it from liability because it had acted in good faith.

Jerman appealed to the U.S. Court of Appeals for the Sixth Circuit, arguing that the bona fide error defense should not cover mistakes of law. That particular issue had not been decided by the Sixth Circuit before; its prior rulings had limited the bona fide error defense to clerical mistakes.

The Sixth Circuit held that mistakes of law are protected under the Act, noting that Congress had never explicitly barred a mistake of law from the bona fide error defense. The Sixth Circuit considered the legislative history of the FDCPA and found evidence indicating mistakes of law should be protected, including the fact that Congress had amended the Act several times and never barred a mistake of law from the bona fide error defense.

The U.S. Supreme Court granted certiorari to determine whether a debt collector's mistake of law is covered by the FDCPA's bona fide error defense. There is a current circuit split as to how far bona fide error protection should be extended. The Second, Eighth, and Ninth Circuits have all held that the bona fide error defense does not extend to errors of law. The Seventh and Tenth Circuits, however, have held that it does. The Supreme Court's ruling will likely settle this split.


This case focuses on the proper statutory interpretation of a provision in the Fair Debt Collection Practices Act (“FDCPA”), which allows debtors to sue for penalties from debt collectors who violate the Act's debt collection regulations. The specific statutory provision at issue is § 1692k(c), which states that a debt collector may not be held liable for violating the Act if “the violation was not intentional and resulted from a bona fide error notwithstanding the maintenance of procedures reasonably adapted to avoid any such error.”

Petitioner Karen Jerman asserts that Respondent law firm Carlisle, McNellie, Rini, Kramer & Ulrich, L.P.A., et al. (“Carlisle”), violated the Act by sending her a notice of collection that did not comply with FDCPA Carlisle concedes the defective nature of the notice but argues that it was a legal error based on a good faith interpretation of the Circuit’s current law and is, therefore, immune from civil penalties under the “bona fide error defense.” Jerman counters that the “bona fide error defense” does not include legal errors that violate the Act.

The plain meaning of the text

Jerman argues that the Sixth Circuit’s ruling that the statute protects mistakes of law is inconsistent with the text of the statute. Focusing on the requirement that the violation be “unintentional,” Jerman argues that the FDCPA uses the term narrowly. Jerman asserts that the defense was meant to protect only those whose unintentional actions violating the statute, rather than those who acted intentionally, but mistakenly believed their actions were legal. Jerman argues that this distinction follows the general legal rule that “ignorance of the law will not excuse any person, either civilly or criminally.” According to Jerman, Congress so rarely makes ignorance of the law a valid defense that courts presume it has not unless the statute clearly provides such. Furthermore, she argues that if Congress intended knowledge of illegality as a prerequisite to liability, it would have used the term willful rather than intentional, because willful is generally regarded as the more appropriate term for that meaning.

Carlisle counters that the word “intentional” is an accepted synonym for “willful,” according to a common dictionary. Consequently, there is no language in the plain reading of the statute that indicates the term “error” should be read to exclude legal errors. Furthermore, Carlisle argues that in order to reach a restricted meaning of the term “error”, the plaintiff has included limitations that do not exist in the statute's actual text.

The plausibility of a legal error defense

Jerman also points out that the bona fide error defense requires that the defendant show that he or she “maint[ained] procedures reasonably adapted to avoid any such error.” She contends that it is more logical to “maintain procedures” to avoid accidental clerical or factual errors than to prevent intentional actions that happen to be legal misjudgments. Furthermore, Jerman argues that courts that have interpreted the provision to include legal errors have struggled with how to apply this clause because of the inherent difficulty in determining which procedures might be reasonably adapted to avoiding errors in judgment. Additionally, she claims that the interpretation also puts federal courts in the awkward position of regulating professional standards for attorneys, a responsibility that has always belonged to the states.

Carlisle counters that the maxim—ignorance of the law is no defense—is a rule predominantly used in criminal cases and is, therefore, not applicable to this civil action. Carlisle argues that even if it were to apply to civil actions, the violation in this case cannot accurately be characterized as “ignorance of the law.” Rather, they assert that their error was due to a reasonable, though incorrect, good-faith interpretation of the statute based on existing case law. Carlisle acknowledges that the bona fide error defense does not explicitly include violations resulting from ignorance of the law, given the requirements that the mistake be in good faith and that debt collectors maintain procedures to prevent error. However, Carlisle contends that the statute still allows for legal errors, as long as the defendant has taken reasonable steps to avoid them.

Carlisle also argues that it is perfectly reasonable to maintain procedures for preventing legal errors as well as the more common clerical errors, such as requiring continuing education classes and frequently reviewing FDCPA law to prevent such mistakes. Carlisle contends that courts should not struggle with evaluating whether reasonable procedures were taken to prevent legal error, because the review is analogous to a reasonable person standard under a common tort claim. Moreover, Carlisle points out that several courts have done just such an analysis, proving that it is workable.

Legislative intent

Jerman argues that the Sixth Circuit’s interpretation that the bona fide error defense include legal errors is contrary to Congressional intent. She claims that excusing legal errors would undermine the deterrent effect of the statute, by allowing debt collectors to take advantage of areas in which the law is unclear. Jerman fears that this in turn will create a race to the bottom as more ethical debt collectors are forced to push the boundaries of legality to stay competitive, counteracting congressional intent. Additionally, Jerman alleges that allowing a legal error defense will discourage citizens from enforcing the statute which is contrary to Congress’ desire to empower debtors to be the primary enforcement mechanism.

Carlisle counters that the most important indication of legislative intent is the plain language of the statute. This rule derives from the canon of interpretation that holds that courts should presume the legislature intended the statute to mean what it says, Carlisle argues; the language alone is sufficient for deciding the proper interpretation of the statute. As such, Carlisle asserts that an increasing majority of federal courts have decided that the bono fide error defense provision does not contain any language that precludes legal errors. They also argue that including legal errors in the defense is consistent with the Act’s purpose. Carlisle argues that the purpose of the Act was to prevent abusive debt collection practices while simultaneously protecting ethical debt collectors. They contend that protecting ethical debt collectors from liability for honest legal mistakes is consistent with this purpose and represents Congress’ attempt to balance these interests. Additionally, Carlisle argues that precluding a legal error defense thwarts the Act’s purposes by encouraging frivolous lawsuits.

How the Truth in Lending Act should influence the analysis

Another point of contention between the parties is whether an earlier consumer protection law, the Truth in Lending Act (“TILA”), should affect the way the court interprets the FDCPA. . TILA is potentially significant, because it contains a similar bona fide error defense provision.

The Sixth Circuit held that although TILA was enacted before the FDCPA, it was amended after the FDCPA to specifically exclude legal errors; thus, Congress did not intend for the FDCPA to exclude legal errors as it did not explicitly provide against it. Jerman disputes the Sixth Circuit’s logic, contending that their reasoning assumes that the 1980 amendment to TILA was meant to change the law, rather than merely codify current case law. Jerman argues that prior to the amendment every court of appeals that had considered the issue rejected a legal error defense under TILA. The amendment did not change the meaning of TILA and, therefore, Congress had no reason to think they would need to change similarly worded provisions in the FDCPA in order to exclude legal errors.

Carlisle counters that it is unnecessary to even consider TILA, because the plain meaning of FDCPA is sufficient to decide the issue. Furthermore, they dispute Jerman’s contention that the meaning of the TILA provision was settled law when the amendment was passed, claiming that the Supreme Court had not decided the issue, and lower courts were split. Lastly, Carlisle argues that there is no evidence that Congress intended to incorporate the meaning of the TILA language in the FDCPA. Because the TILA provided lenders with other defenses for legal errors, Carlisle contends that Congress did not need to use the bona fide error defense to immunize them from good faith legal mistakes.


The Supreme Court will decide whether a debt collector’s unintentional legal mistake is covered by the bona fide error defense, shielding it from liability for violating the Fair Debt Collection Practices Act (“FDCPA”). Practically, the Supreme Court's decision will affect debt collectors’ practices and redefine the recourse potential plaintiffs have when complaining of unfair debt-collection techniques. The decision will also likely settle a split in the federal circuit courts over whether a debt collector’s mistake of law — as opposed to a mere clerical error — shields it from liability under the FDCPA.

A ruling for Carlisle would allow a debt collector to assert a mistake of law as a defense to liability as a “bona fide error.” Amici backing Jerman argue that such a ruling would "undermine" the important checks on debt-collection practice that the FDCPA ostensibly provides. They contend that individuals would have little incentive to complain of unfair debt practices, because debt collectors could merely assert a bona fide mistake of law to block a recovery.

Amici argue that such a ruling could also strip individuals of the incentive to sue for practices that are unsettled in debt-collection law, as individuals would likely only challenge "blatant or obvious violations of the FDCPA,” and new types of debt-collection abuses could go unchecked and unchallenged . . .” In this way, a ruling for Carlisle would weaken the FDCPA, they argue, because it depends on private action to ensure enforcement.

Respondent Carlisle and its amici argue, however, that a ruling for Jerman would expose debt collectors to unwarranted personal liability. Since debt-collection law is often unsettled, NARCA argues that the risk of potential liability might give debt-collection attorneys less incentive to represent their clients zealously.

This risk of liability could also mean a heightened standard of care for debt-collection attorneys, amici for Carlisle argue. America's Mortgage Banking Attorneys contend that attorneys are not typically liable for malpractice when their legal argument is rejected by a court, but they could be held liable under Jerman's interpretation if they make a good-faith legal mistake. Amici contend that this could have a chilling effect on zealous representation by attorneys.

Amici for Jerman point out that the FDCPA allows debt collectors to seek advice and clarification on collection methods from the Federal Trade Commission ("FTC"), a practice the government encourages because it provides a public record that can further the overall goals of the act. The FTC argues, on behalf of the United States, that a ruling for Carlisly would hamper its advisory role, because debt collectors may forgo seeking advice from the FTC and, instead, rely on the safety net a mistake of law defense would provide. The risk of liability currently falls on a debt collector that does not seek an advisory opinion, but amici for Jerman argue that allowing a mistake of law defense could permit a debt collector who does not seek an advisory opinion to avoid that risk. Fewer advisory opinions, the FTC argues, would lead to more ambiguity in debt-collection law.

Amici for Carlisle counter that a ruling for Jerman could affect reliance interests of debt collectors, who should be able to rely on a facially valid judicial opinion in representing creditors and avoid liability if a subsequent judicial decision "goes the other way." ACA argues that if creditors do not have the freedom to be mistaken when relying on judicial opinions in an unsettled area of law, debt collectors could be held liable if different courts decide the same issues differently. at 7-8.

Amici for Jerman argue, however, that courts should continually review unsettled legal issues, and that this would happen less efficiently with a ruling for Carlisle. If debt collectors could plead a mistake of law, Public Citizen argues that the potential illegality of their underlying conduct is not addressed, preventing courts from weighing in on unsettled legal issues.


This case will resolve a circuit court split regarding whether debtors may sue debt collectors for penalties under the Fair Debt Collection Practices Act (“FDCPA”) for violations resulting from good faith misinterpretations of the statute. Respondents Carlisle, McNellie, Rini, Kramer & Ulrich, L.P.A., et al. (“Carlisle”) contend that legal mistakes should be immune from liability under the FDCPA’s “bona fide error defense,” which shields debt collectors from penalties for unintentional violations of the FDCPA. The Sixth Circuit agreed with the respondent that the defense included legal errors. Petitioner Karen Jerman argues that proper statutory interpretation dictates that the bona fide error defense only covers clerical and factual mistakes, rather than legal errors such as misinterpretations. The Supreme Court's resolution of this case will likely affect the liability of debt collectors and the professional responsibilities of and ethics standards for attorneys who collect debt for their clients.

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