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Saturday, December 9, 2023
Courthouse News Service
Saturday, December 9, 2023 | Back issues
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Student Who Lost Loan Default Fight Owes Costs

WASHINGTON (CN) - A debt collector that dodged civil claims over its practices can recoup costs from a woman who defaulted on a student loan, the Supreme Court ruled Tuesday.

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, codified at Section 1692k(a)(3), a prevailing defendant can recover costs if it shows that the plaintiff filed suit in bad faith and for the purpose of harassment. But Rule 54(d) of the Federal Rules of Civil Procedure does not require that finding.

"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.

A seven-justice majority of the Supreme Court affirmed Tuesday, saying that a trial court need not find bad faith and harassment to award costs.

The U.S. government had claimed otherwise in an amicus curiae brief for Marx, but the court deemed this argument unpersuasive.

"Had Congress intended the second sentence of §1692k(a)(3) to displace Rule 54(d)(1),it could have easily done so by using the word 'only' be­fore setting forth the condition '[o]n a finding by the court that an action ... was brought in bad faith and for the purpose of harassment,'"

Justice Clarence Thomas wrote for the majority.

Justice Sonia Sotomayor, joined in dissent by Justice Elena Kagan, insisted, however, that the majority's decision "renders the statutory language at issue in this case meaningless."

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