One to Watch: U.S. Supreme Court Considers FDCPA Defense
The U.S. Supreme Court has granted certiorari in Jerman v. Carlisle, McNellie, Rini, Kramer & Ulrich LPA, 538 F.3d 469 (6th Cir. 2008), to consider whether a mistake of law can be the basis of a bona fide error defense under the Fair Debt Collection Practices Act.
In Jerman, plaintiff filed suit against a collection law firm alleging violations of the FDCPA, among other things, based on assertions to plaintiff by the law firm that her debts would be assumed valid unless she disputed the debt in writing, which is not required by the FDCPA. The district court granted summary judgment for defendant, holding that defendant's mistake of law was a bona fide error under the FDCPA, shielding them from liability. Plaintiff appealed. The Sixth Circuit affirmed, holding that mistakes of law, in addition to clerical errors, can be the basis of a bona fide error defense under the FDCPA.
The Sixth Circuit rejected plaintiff's argument that a mistake of law is not a valid basis for a bona fide error defense under the FDCPA because it has been expressly rejected as a basis for a bona fide error defense under the Truth in Lending Act. The Court interpreted the absence of an express exclusion of a mistake of law as a bona fide error in TILA as evidence that Congress did not intend to exclude it under the FDCPA, which does not contain such an exclusion.
The U.S. Supreme Court is expected to resolve a split in the Circuits between courts that recognize mistakes of law as bona fide errors under the FDCPA (10th Circuit, 6th Circuit) and courts that do not (2nd Circuit, 8th Circuit, 9th Circuit).
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