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There aren’t many silver linings to finding yourself on the receiving end of a Fair Debt Collection Practices Act (FDCPA) lawsuit, but the Supreme Court identified one on Monday.
If a debtor sues for a FDCPA violation and loses, the debtor can be assigned attorney’s fees and costs.
The case, Marx v. General Revenue Corporation, could discourage debtors from pursuing FDCPA claims.
After appellant Olivea Marx defaulted on her student loan, General Revenue Corporation (GRC) tried to collect on the account. Marx later sued GRC, alleging that GRC violated the FDCPA by making abusive and threatening phone calls and sending a facsimile to her workplace. The district court, after a one-day trial, found that the challenged collection practices were neither abusive nor threatening, and ordered Marx to pay $4,500 in costs to GRC.
Marx moved to vacate the award, arguing that the court's discretion under FRCP 54(d)(1) was displaced by 15 USC §1692k(a)(3), which says "on 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." Since she made her claim in good faith, she argued that she shouldn't have to pay costs. The Supreme Court disagreed.
In a 7-2 opinion written by Justice Clarence Thomas, the Court held "Had Congress intended the second sentence of §1692k(a)(3) to displace Rule 54(d)(1), it could have easily done so by using the word 'only' before setting forth the condition 'on a finding by the court that an action ... was brought in bad faith and for the purpose of harassment,'" Courthouse News Service reports.
Of course, that doesn't mean that a court must award fees. As Justice Thomas noted in the opinion, "Rule 54(d)(1) codifies a venerable presumption that prevailing parties are entitled to costs. Notwithstanding this presumption, the word 'should' makes clear that the decision whether to award costs ultimately lies within the sound discretion of the district court."
Don't misconstrue this decision as a reason to pursue debtors outside the boundaries of the Act. A losing debtor may be forced to pay the winning collector's costs, but there are plenty of debtors who win their FDCPA violation lawsuits.