Guarantor says fax to employer was not debt collection corrspondence
By Kimberly Atkins
The Daily Record Newswire
BOSTON — In a case involving prevailing party costs and an apparent conflict between a federal statute and a rule of civil procedure, the justices of the U.S. Supreme Court considered whether debt collection defendants can recover costs in non-frivolous cases.
The Court heard oral arguments Wednesday in Marx v. General Revenue Corp., which stems from a Fair Debt Collection Practices Act lawsuit filed by Olivea Marx. Marx, who defaulted on a student loan, claimed that the loan guarantor violated the Act’s prohibition against contacting third parties about debt collection measures when it sent a fax to Marx’s employer.
The guarantor argued that the fax was a request for information about Marx’s employment status, not debt collection correspondence.
The district court ruled for the guarantor and awarded it $4,500 in costs as the prevailing party.
Marx appealed the costs award, arguing that under of §1692k(a)(3) of the Act, only claims “brought in bad faith and for the purpose of harassment” are eligible for prevailing party cost awards and attorney fees. Because the district court made no finding of bad faith or harassment, she argued, the cost award was improper.
The 10th Circuit affirmed the lower court, holding that the defendant was entitled to costs under Rule 54(d) of the Federal Rules of Civil Procedure, and that rule was not superseded by the FDCPA’s language.
The Supreme Court granted certiorari.
Implied repeal and general ignorance
Allison M. Zieve of the Public Citizen Litigation Group in Washington argued on Marx’s behalf that the FDCPA’s costs provision trumps Rule 54(d).
“Rule 54(d) provides a standard for an award of costs to a prevailing party that, by the rule’s express terms, does not apply where a federal statute provides otherwise,” Zieve argued.
Justice Antonin G. Scalia expressed doubt about that view, saying it would amount to an implied repeal of Rule 54(d) in fair credit reporting cases.
“It’s ancient law that repeals by implication are not favored,” Scalia said. “What you’re arguing here is that that provision effectively repeals another provision.”
Zieve said that Rule 54(d) by its terms does not apply in cases of conflicting law.
“But you are assuming a conflict,” said Justice Ruth Bader Ginsburg, noting that in the instant case the parties agree there was no bath faith or harassment as described in the FDCPA. “If you are not a bad-faith harassing plaintiff, but you nonetheless lost, then you’re under 54(d)” instead of the FDCPA.
Eric J. Feigin, assistant to the solicitor general, argued for the government as amicus in support of Marx that the FDCPA language should prevail because of the “well-established principle that a specific provision displaces a more general one.”
Justice Stephen G. Breyer pointed out that lawmakers don’t always intend to supersede other laws when they draft legislation.
“The people who actually draft these things … don’t know every statute,” Breyer said.
Scalia interjected. “We have to assume ignorance of the drafter?” he asked.
“Yes, ignorance of other laws,” Breyer said.
“As a general principle?” Scalia pressed.
“That’s right,” Breyer said as the audience laughed. “General ignorance.”
Like peanut butter and jelly
Lisa S. Blatt, a partner in the Washington office of Arnold & Porter, argued for the loan guarantor that the FDCPA’s language “does not strip courts of their discretion under Rule 54 to award costs to prevailing defendants.”
Blatt said that other laws have similar provisions that allow for attorney fees.
Justice Elena Kagan noted that the FDCPA, unlike other statutes, refers to both fees and costs. “Now you might say that’s very uncommon” and suggests that the costs provision in Rule 54 was meant to be superseded.
But Blatt said it wasn’t uncommon at all.
“Fee shifting provisions routinely refer to both fees and costs, just like salt and pepper, peanut butter and jelly,” she said. “They go together as a set.”
Justice Sonia M. Sotomayor noted that “there are some statutes that don’t” mentio fees and costs.
“Yes,” Blatt said.
“So it’s not always peanut butter and jelly. It’s peanut butter and honey sometimes,” Sotomayor said, drawing laughs.
“Love and marriage,” Scalia said, getting more laughs.
“I don’t know about that one,” Blatt replied.
A decision from the Court is expected later this term.
