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Argument preview: Court considers litigation expenses in debt-collection disputes

Next week’s argument in Marx v. General Revenue Corporation offers the Court a bread-and-butter case of statutory interpretation, ornamented by skillful briefing on both sides.

The case involves the standard for awarding costs in litigation under the Fair Debt Collection Practices Act (the FDCPA).  The facts are straightforward.  Marx was upset by the efforts of General Revenue Corporation (GRC) to collect a student-loan debt that she owed.  She filed suit under the FDCPA, alleging that the activities violated that statute.  After a bench trial, however, the district court rejected all of Marx’s contentions, concluding that GRC had not violated the FDCPA in any way.

At that point, GRC submitted a bill to Marx seeking payment of the costs of the litigation (but not its attorney’s fees).  The amount in question was about $8,000 that GRC had expended on witness fees, travel expenses, and the like.  GRC contended that it was entitled to recover those costs from Marx under Federal Rule of Civil Procedure 54(d), which states that “costs—other than attorney’s fees—should be allowed to the prevailing party” “[u]nless a federal statute . . . provides otherwise.” Marx protested, contending that costs are not available under the FDCPA, which statute authorizes a court to award costs if the plaintiff brought the case “in bad faith and for the purpose of harassment.” Marx argued that the explicit authorization for costs in that clause implicitly barred any award of costs except in cases of bad faith and harassment.  Both of the lower courts rejected Marx’s argument and ordered her to pay costs to GRC.

The briefing in the Supreme Court is excellent.  Marx (represented by Allison Zieve at the Public Citizen Litigation Group) presents a two-part argument of powerful directness.  The first point is an affirmative reading of the statute. Rule 54 allows costs to “the prevailing party” unless a statute “provides otherwise.” The FDCPA allows costs for bad faith and harassment.  Because the bad faith and harassment standard in the FDCPA is different from the prevailing party standard in Rule 54, it amounts to “provid[ing] otherwise” and thus prevents the availability of costs in this case.  The second point criticizes the contrary reading of the court below.  Because the effect of the decision below is to leave Rule 54 applicable to FDCPA cases, it renders wholly superfluous the reference to “costs” in the FDCPA: Costs would be available in exactly the same cases if the FDCPA had omitted its reference to costs.  The Solicitor General’s brief in support of Marx buttresses both of those points.

GRC (represented by Lisa Blatt) rebuts both of those points masterfully.  On the first point, she emphasizes the basic purpose of the FDCPA provision, which is plainly to provide relief to defendants by helping reduce the costs of baseless litigation.  It would be strange, she emphasizes, for a provision added to protect defendants from harassment to be read as implicitly increasing their exposure in cases (like this one) in which they are found to have done nothing wrong. She also points to a vast number of statutes in which Congress has explicitly barred the award of costs to prevailing parties; the common practice of using explicit language to take a case out of Rule 54 undermines the idea that the bad-faith/harassment language of the FDCPA should be read as an implicit rejection of the Rule 54 standard.

She expands that argument with a lucid presentation of the odd pattern of cost allowance that would follow from Zieve’s argument under the eight parts of the Consumer Credit Protection Act: because only two of those statutes (the FDCPA and the Electronic Fund Transfer Act (EFTA)) include similar language, the effect of Marx’s argument is to punish two particular groups of defendants and benefit two particular groups of plaintiffs, as against all other disputants under the statute.  She capably shows that the likelihood that Congress would have singled out FDCPA and EFTA plaintiffs for especially favorable treatment is quite remote. To be sure, Zieve can reply that the various statutes were adopted at different times and reflect differing compromises, but the point still hits home for Blatt.

Finally, Blatt rejects Zieve’s contention that the reference to costs in the FDCPA is superfluous.  First, she suggests that removing costs from the provision might lead courts to conclude that defendants can get only attorney’s fees (not costs) even in the case of harassment.  Second, she suggests that the FDCPA provision allows for costs in two situations in which they would not be available under Rule 54 – cases in which the defendant does not technically prevail (because the plaintiff accepts a voluntary dismissal before judgment), and cases in which a defendant has costs of litigation that are broader than the “taxable” costs available under Rule 54. Zieve argues in reply that both of those categories are illusory, but Blatt at least lays the ground for the view that the reference to costs has some content even under her reading.

This won’t be the most contentious case on the Court’s docket in November, but the briefs and experience of counsel suggest that the argument will be at a high level.


Recommended Citation: Ronald Mann, Argument preview: Court considers litigation expenses in debt-collection disputes, SCOTUSblog (Oct. 30, 2012, 12:52 PM),