Debt Collector to Defend Costs Before High Court
(CN) - The Supreme Court on Tuesday agreed to determine whether a debt collector can recoup costs after dodging civil claims over its practices.
After a one-day trial in May 2010, a federal judge in Colorado ruled that General Revenue Corp. did not violate the Fair Debt Collection Practices Act (FDCPA) in pursuing Olivea Marx over a student loan in default.
A divided panel of the 10th Circuit affirmed that finding in December 2011, as well as the award of more than $4,500 in costs to the debt collector.
Under the FDCPA, a prevailing defendant can recover costs if it shows that the plaintiff filed suit in bad faith and for the purpose of harassment. But the Federal Rules of Civil Procedure does not require that finding.
"This requires us to consider whether § 1692k(a)(3) supersedes Rule 54(d)," the two-judge majority ruled. "We hold that it does not, and that this defendant is entitled to a recovery of costs pursuant to Rule 54(d)."
"In sum, Rule 54(d) requires that courts award costs to the prevailing party unless a federal statute provides otherwise," the decision also states. "We find that there is nothing in the language of §1692k(a)(3) that should prevent Rule 54(d)'s normal operation."
In a dissenting opinion, Judge Carlos Lucero said that Marx did present evidence that the debt collector violated the FDCPA. Though that holding meant that Lucero need not consider the issue of costs, he said that his colleagues erred in this respect as well.
"The majority concludes again that a portion of the FDCPA is mere surplusage," he wrote.
The Supreme Court granted Marx's petition for certiorari Tuesday, but agreed to consider only the issue of costs.