Jerman v. Carlisle, McNellie, Rini, Kramer, & Ulrich LPA

PETITIONER: Karen L. Jerman
RESPONDENT: Carlisle, McNellie, Rini, Kramer, & Ulrich LPA et al.
LOCATION: Carlisle Law Firm

DOCKET NO.: 08-1200
DECIDED BY: Roberts Court (2009-2010)
LOWER COURT: United States Court of Appeals for the Sixth Circuit

CITATION: 559 US 573 (2010)
GRANTED: Jun 29, 2009
ARGUED: Jan 13, 2010
DECIDED: Apr 21, 2010

ADVOCATES:
George S. Coakley - for the respondents
Kevin K. Russell - for the petitioner
William M. Jay - Assistant to the Solicitor General, Department of Justice, for the United States, as amicus curiae

Facts of the case

Karen L. Jerman filed suit in an Ohio federal district against the law firm Carlisle, McNellie, Rini, Kramer & Ulrich for violating the Fair Debt Collection Practices Act ("FDCPA"). The law firm had sought foreclosure on a property owned by Ms. Jerman and erroneously informed her that the FDCPA stated that the debt in question would be considered valid unless she disputed it in writing. Only later did the law firm discover that Ms. Jerman owed no debt and consequently withdrew its complaint. Before trial, the law firm argued that while it violated the FDCPA, its error was a bona fide error, and thus a complete defense to its actions. The district court agreed and dismissed the case.

On appeal, the U.S. Court of Appeals for the Sixth Circuit affirmed, holding that the FDCPA error defense applies to mistakes of law. The court reasoned that the statutory language and legislative history behind the FDCPA did not indicate Congress intended it to apply solely to clerical errors.

Question

Does a debt collector's mistake in law qualify for the FDCPA bona fide error defense?

Media for Jerman v. Carlisle, McNellie, Rini, Kramer, & Ulrich LPA

Audio Transcription for Oral Argument - January 13, 2010 in Jerman v. Carlisle, McNellie, Rini, Kramer, & Ulrich LPA

Audio Transcription for Opinion Announcement - April 21, 2010 in Jerman v. Carlisle, McNellie, Rini, Kramer, & Ulrich LPA

John G. Roberts, Jr.:

Justice Sotomayor has our opinion this morning in case 08-1200, Jerman versus Carlisle.

Sonia Sotomayor:

This case comes to us on a writ of certiorari to the United States Court of Appeals for the Sixth Circuit.

The Fair Debt Collection Practices Act imposes liability on debt collectors for certain prohibited dept collection practices.

The Act provides however a so-called Bona Fide Error Defense.

Under that defense a debt collector can avoid liability by showing that a violation of the Act was “not intentional and resulted from a bonafide error notwithstanding the maintenance of procedures reasonably adapted to avoid any such error”.

The petition filed this lawsuit alleging that respondents a law firm and one of its attorneys violated the Act in attempting to collect the debt.

The District Court found that the Bona Fide Error Defense shielded respondents for liability, for the violation in question, which had resulted from their misunderstanding of the Act’s legal requirements, the Sixth Circuit affirmed.

For the reasons set forth more fully in our opinion, we hold that the Bona Fide Error Defense does not apply to violations that result from the debt collector’s misinterpretation of the Act’s legal requirements.

Our holding follows from the statute's text, structure and history and in our view will not impose unworkable practical burdens on employers who act as debt collectors.

Because the Sixth Circuit held that violations resulting from mistaken legal interpretations of the Act could qualify under the Bona Fide Error Defense.

We reverse the judgment of that Court and remand the case for further proceedings consistent with our opinion.

Justice Breyer has filed a concurring opinion, Justice Scalia has filed an opinion concurring in part and concurring in the judgment.

Justice Kennedy has filed a dissenting opinion in which Justice Alito has joined.