Steve Harms

Friday, March 1, 2013

FDCPA defendant may recover costs against an unsuccessful plaintiff

Good news for collectors who are sued unsuccessfully by a plaintiff for violating the Fair Debt Collection Practices Act (FDCPA): the United States Supreme Court just ruled that the defendant in the case may recover costs against the unsuccessful plaintiff. 

The plaintiff in the case before the Supreme Court argued that costs could only be assessed against a plaintiff if the action was brought in "bad faith" as per Section 1692 k (a)(3) of the FDCPA.

The Supreme Court said the bad faith requirement does NOT prevent a court from awarding costs against a plaintiff who brings a FDCPA claim, even if in good faith, if the suit is unsuccessful. A portion of the rather long opinion is attached here:

Petitioner Marx filed suit, alleging that General Revenue Corporation (GRC) violated the Fair Debt Collection Practices Act (FDCPA) by harassing and falsely threatening her in order to collect on a debt.The District Court ruled against Marx and awarded GRC costs pursuant to Federal Rule of Civil Procedure (FRCP) 54(d)(1), which gives district courts discretion to award costs to prevailing defendants“[u]nless a federal statute . . . provides otherwise.” Marx sought to vacate the award, arguing that the court’s discretion under Rule54(d)(1) was displaced by 15 U. S. C. §1692k(a)(3), which provides, in pertinent part, 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.” The District Court rejected Marx’s argument. The Tenth Circuit affirmed, in pertinent part, agreeing that costs are allowed under the Rule and concluding that nothing in the statute’s text, history, or purpose indicates that it was meant to displace the Rule.
Held: Section §1692k(a)(3) is not contrary to, and, thus, does not displace a district court’s discretion to award costs under, Rule 54(d)(1).Pp. 4–16.

(a) Rule 54(d)(1) gives courts discretion to award costs to prevailing parties, but this discretion can be displaced by a federal statute or FRCP that “provides otherwise,” i.e., is “contrary” to Rule 54(d)(1).Contrary to the argument of Marx and the United States, as amicus, language of the original 1937 version of the Rule does not suggest that any “express provision” for costs should displace Rule 54(d
....Congress did not intend §1692k(a)(3) to foreclose courts from awarding costs under the Rule.

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