UPDATE – Marx v. General Revenue Corp.

By on March 18, 2013

A couple months ago, we discussed a case that was before the United States Supreme Court that will have a tremendous effect on FDCPA litigation nationwide. The case addressed the issue of cost shifting in a FDCPA lawsuit.  In Marx v. General Revenue Corp., the United States Supreme Court reviewed the decision from the 10th Circuit that awarded costs to a prevailing defendant debt collector absent a showing of bad faith or harassment on the part of the consumer in filing suit.  On appeal, the defendant debt collector’s position was logical and straight forward.  In summary, the prevailing debt collector argued that in a FDCPA lawsuit, like any other cause of action, an award of costs should go to the prevailing party.  In opposing the award of costs, the consumer suggested that the language of the FDCPA provides that if a debt collector prevails at trial, it is only entitled to costs and potentially attorney’s fees if the Court finds that the claim was “brought in bad faith and for the purpose of harassment.”  In upholding the award of costs to the prevailing debt collector, the United States Supreme Court reiterated a common tenet of our judicial system – both parties in litigation should be treated fairly and held to the same standard. While it is still in the best interests of a debt collector to resolve most FDCPA claims at an early stage, this holding may relieve some of the burden/risk debt collectors incur when they are forced to defend cases as a result of unreasonable settlement demands and/or a meritless claim.

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