A case that is currently before the United States Supreme Court may have a tremendous effect on FDCPA litigation nationwide. The case addresses the issue of cost shifting in a FDCPA lawsuit.
In a typical lawsuit, the prevailing party is entitled to recoup the costs of the case. However, the FDCPA provides that if a debt collector prevails at trial, is 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.” Federal Rule of Civil Procedure 54(d) provides that “[u]nless a federal statute, these rules, or a court order provides otherwise, costs — other than attorney’s fees — should be allowed to the prevailing party.”
In Marx v. General Revenue Corp., a Colorado woman incurred student debt and failed to pay it. When the consumer was contacted by a debt collector, she alleged she was the victim of abusive and harassing behavior that violated the FDCPA. More specifically, the consumer alleged in a lawsuit that the debt collector: (1) called her several times a day; (2) illegally threatened to garnish half her wages; and (3) sent a collection-related fax to her employer. The trial court disagreed with the consumer and found for the debt collector. The trial court further ordered the consumer to pay $4,543 in costs.
On appeal, General Revenue Corp. has maintained the position that in a FDCPA lawsuit, like any other cause of action, an award of costs should go to the prevailing party. This matter was argued before the United States Supreme Court in November 2012 and the FDCPA world anxiously awaits the decision.
If the Supreme Court upholds the award of costs to the debt collector, its decision may have a curtailing effect on the volume of FDCPA claims being filed.