The United States Supreme Court has decided to hear a case in which it will determine whether a Defendant debt collector can be awarded costs if it wins its case in federal court. The case, Marx v. General Revenue Corp., was previously decided by U. S. Court of Appeals for the 10th Circuit, which awarded costs to GRC, the debt collector, after finding that the collector did not violate the law.
With this case, the U.S. Supreme Court will resolve a conflict between the Fair Debt Collection Practices Act, 15 U.S.C. §1692, (the “FDCPA”) and the Federal Rules of Civil Procedure, (the “FRCP”). Section 813 of the FDCPA states that attorneys fees and costs can be awarded to a Defendant collector upon a finding that a Plaintiff consumer brought a case in bad faith for the purpose of harassment. However, Rule 54(d) of the FRCP permits a prevailing party to recover costs “unless a federal statute . . . provides otherwise.”
The essential question is whether the FDCPA is a federal statute that “provides otherwise,” as stated in FRCP Rule 54(d). If the U.S. Supreme Court upholds the 10th Circuit decision, it will likely have a chilling effect on FDCPA consumer suits. Debt-strapped consumers will be less inclined to bring suits if they can be forced to pay for courts costs, even if the suit was brought in good faith.
The case is expected to be heard for oral argument in October, 2012.