Marx v. General Revenue Corporation

PETITIONER: Olivea Marx
RESPONDENT: General Revenue Corporation
LOCATION: General Revenue Corporation

DOCKET NO.: 11-1175
DECIDED BY: Roberts Court (2010-2016)
LOWER COURT: United States Court of Appeals for the Tenth Circuit

CITATION: 568 US (2013)
GRANTED: May 29, 2012
ARGUED: Nov 07, 2012
DECIDED: Feb 26, 2013

ADVOCATES:
Allison M. Zieve - for the petitioner
Eric J. Feigin - Assistant to the Solicitor General, Department of Justice, for the United States, as amicus curiae, supporting the petitioner
Lisa S. Blatt - for the respondent

Facts of the case

Elenea Marx defaulted on her student loans. In September 2008, her guarantor, EdFund, a division of the California Student Aid Commission, hired the General Revenue Corporation ("GRC") to collect on the account. That same month, a GRC agent faxed Marx's employer a form displaying basic contact information for GRC. It also left blanks for the employer to fill in information about the employee's employment status and other related information.

The Fair Debt Collection Practices Act ("FDCPA") prohibited communications with third parties in connection with the collection of debt. It also allowed courts to award costs to prevailing defendants in actions brought in bad faith and for the purpose of harassment. Rule 54(d) of the Federal Rules of Civil Procedure, however, prevented courts from awarding courts if a statute provided otherwise. Marx sued GRC in October 2008, alleging abusive and threatening phone calls in violation of the FDCPA. She amended her complaint in March 2009 to add a claim that GRC violated the FDCPA by sending the fax to her workplace to request employment information.

The district court dismissed her complaint, holding that the fax was not a "communication" within the meaning of the act, and ordering Marx to pay court costs. The United States Court of Appeals, Tenth Circuit, affirmed with one dissent, holding that the fax was not a communication. The Tenth Circuit also held that the act did not prevent courts from awarding costs to prevailing defendants. Marx's petition for an en banc rehearing was denied.

Question

Did the Fair Debt Collection Practices Act prevent the district court from awarding costs to the General Revenue Corporation unless Marx filed her claim in bad faith and for the purpose of harassment?

Media for Marx v. General Revenue Corporation

Audio Transcription for Oral Argument - November 07, 2012 in Marx v. General Revenue Corporation

Audio Transcription for Opinion Announcement - February 26, 2013 in Marx v. General Revenue Corporation

John G. Roberts, Jr.:

Justice Thomas has our opinion this morning, case 11-1175, Marx versus General Revenue Corporation.

Clarence Thomas:

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

The Fair Debt Collection Practices Act prohibits certain debt collection practices.

Olivea Marx filed a lawsuit against General Revenue Corporation, alleging that it violated the Act by harrassing and threatening her in order to collect the debt.

The District Court ruled against Marx and awarded respondent, General Revenue Corporation, cost pursuant to Rule 54(d) of the Federal Rules of Civil Procedure.

This rule gives the courts the discretion to award cost to the prevailing party, unless a federal statute provides otherwise.

Marx, moved to vacate the award arguing that section 1692k(a)(3) of the FDCPA provides otherwise.

That section provides that “On a finding by the court that an action under this section was brought in bad faith and for the purpose of harassment, the court may award the defendant attorney's fees reasonable in relation to the work expended and costs.”

That's a sentence crying out for editing.

Marx argued that this provision means that a court may award cost to the defendant, only on a finding that the action was brought in bad faith.

In her view, because she brought the case in good faith, the respondent was not entitled to cost.

The District Court rejected Marx's interpretation of the statute.

The Tenth Circuit affirmed.

It agreed with the District Court that costs were allowed under Rule 54(d) even in the absence of bad faith because nothing in The Fair Debt Collection Practices Act displaced the judge's discretion under that rule.

In an opinion filed with the clerk today, we affirm the Tenth Circuit.

Rule 54(d) gives courts discretion to award cost to prevailing parties.

That discretion can be displaced by a federal statute that “Provides otherwise.”

A statute provides otherwise if it is contrary to the Rule 54(d).

The language and context of section 1692k(a)(3) persuade us that it is not contrary to Rule 54(d).

Section 1692k(a)(3) provides that when a plaintiff brings an action in bad faith, the court may award attorney's fees and costs to the defendant.

The best reading of the statute is that Congress intended it to deter plaintiffs from bringing lawsuits in bad faith, but it does not address whether cost may be awarded in this -- in a case such as this, where the plaintiff brought the case in good faith.

Marx argue that by specifying that a Court may award attorney's fees and cost when an action is brought in bad faith, Congress intended to preclude a Court from awarding fees and costs when bad faith and purpose of harassment are absent.

We are not persuaded by that argument.

The statute provides that when the plaintiff brings an action in bad faith, the Court may award attorney's fees to the defendant, but a court has inherent power to award attorney's fees based on a litigant's bad faith even without section 1692k(a)(3).

The fact that Section 1692k(a)(3) codifies the background rules for attorney's fees, weighs against inferring congressional intent to override the background rule with respect to cost.

We note that Congress has expressly limited court's discretion to award cost in other statutes.

Had Congress intended section 1692k(a)(3) to displace the rule, it would have -- it could have easily done so by saying that the court may award cost to the defendant only on a finding that the action was brought in bad faith and for the purpose of harassment.

For these reasons and reasons setup more fully in our opinion, we conclude that section 1692k(a)(3) does not provide otherwise, than Rule 54(d) and that the District Court had discretion to award cost without finding that the plaintiff brought the action in bad faith.

Justice Sotomayor has filed a dissenting opinion in which Justice Kagan joins.

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