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Opinion analysis: Court holds losers responsible for costs of debt-collection disputes.

Marx v. General Revenue Corporation is surely one of the simplest cases of the Term – a classic example of an issue that reaches the Court only because of a circuit conflict.  The dispute involves rules for treatment of the expenses of litigation.  Traditionally, in this country, expenses of litigation are divided into two major categories.  The first (often by far the largest) is attorney’s fees; ordinarily, win or lose, each party bears its own attorney’s fees.  The second category is “costs,” which excludes attorney’s fees, but includes such things as witness fees, the costs of transcribing depositions, and the like.  Although normally much less than attorney’s fees, costs are often more than trivial.

This case involves a dispute over debt-collection tactics.  Marx sued General Revenue Corporation (GRC), a euphemistically named entity that is one of the nation’s leading debt collectors, claiming that GRC had violated the Fair Debt Collection Practices Act (FDCPA) with certain steps it had taken to collect a debt from Marx.   When Marx lost after a bench trial, GRC submitted a bill to Marx seeking payment of several thousand dollars of its costs.  Marx protested, pointing out that the FDCPA authorizes an award of fees and costs if the case was brought for bad faith and harassment.  Because this case was not brought in bad faith, Marx contended, she should not have to pay GRC’s costs.  Although both the lower courts rejected Marx’s claim, the Supreme Court granted review (apparently to address a conflict with the Ninth Circuit, which has taken the contrary view).

In an opinion reminiscent of the Chief Justice’s opinion in Gunn v. Minton earlier last week, Justice Thomas disposed of the matter in a brief opinion, notable for its direct adoption of the two principal arguments of GRC’s counsel, Lisa Blatt.  The centerpiece of Marx’s claim (presented in the Supreme Court by Allison Zieve of Public Citizen) is that barring costs here is the only way to make sense of all the words of the FDCPA.  The relevant provision of the FDCPA states that the court, in a case of harassment and bad faith, “may award * * * fees * * * and costs.”  If that sentence means that a court can award both fees and costs in cases of harassment and bad faith, but can award neither fees nor costs in cases that do not involve harassment and bad faith, then the inclusion of a reference to “costs” is necessary.  But if the result is that a court can award costs to the prevailing party in all cases (even if the plaintiff’s suits did not involve bad faith or harassment), then (Zieve argued forcefully) Congress might as well have left out the reference to costs.

Blatt’s answer, adopted wholesale by the Court, in an opinion by Justice Thomas, is to shift the focus to the preceding sentence of the FDCPA.  That sentence departs from the normal rule for attorney’s fees, to the advantage of FDCPA plaintiffs, by providing that losing FDCPA defendants must pay not only costs but also attorney’s fees.  Against that context, if the sentence at issue here had said only that bad-faith/harassing plaintiffs must pay attorney’s fees, it would be open to the implication that they need not pay costs.  So Congress needed to mention costs to avoid that unacceptable implication.

The Court’s second main point also comes straight out of Blatt’s arguments: she presented a catalog of numerous statutes in which Congress explicitly limited the availability of costs.  Given the custom of clarity when Congress wants to limit the recovery of costs by prevailing parties, it makes little sense (the Court agreed) to infer such a rule by negative implication from the FDCPA provision at issue here.

Two additional points underscore the completeness of Blatt’s success in winning the Court to her perspective.  First, the vigor of the Court’s disposition is notable in a statutory interpretation case in which the Solicitor General appeared on the losing side.  Despite the best the Solicitor General could offer, the Court treated the case as almost self-evidently easy, and only two Justices (Sotomayor and Kagan) dissented from the disposition.

Second, even the dissenters shied away from the principal argument Zieve presented on Marx’s behalf – the idea that GRC’s reading made the reference to “costs” in the FDCPA superfluous.  Although that argument was presented with care in the briefs and seemed facially appealing at the argument, Justice Sotomayor chose in her dissent to emphasize a somewhat different point.  She focused on the language in Federal Rule of Civil Procedure 54 (the baseline provision that authorizes costs unless some other statute “provides otherwise”).  In her view, any statute that addresses costs in any terms other than the terms of Rule 54 “provides otherwise.”  Because the FDCPA rule is different from Rule 54, it essentially (in Justice Sotomayor’s view) preempts Rule 54 entirely – in all cases, not only the cases of direct textual conflict.  As presented in her opinion, that argument came off as somewhat eccentric; it seems best to surmise, I suppose, that she (like the majority) found Blatt’s response to Zieve’s principal argument so devastating that she felt compelled to rest primarily on some other ground.

PLAIN LANGUAGE SUMMARY: If a consumer thinks a debt collector has used unlawful collection tactics, it can sue the debt collector under a special federal statute (the “FDCPA”).  The question in this case is what happens if the consumer does sue the debt collector but turns out to be wrong – the tactics were not unlawful.  Everybody agrees that the consumer does not have to pay the debt collector’s attorney’s fees.  But the Court holds in this case that the consumer does have to pay the debt collector’s other out-of-pocket costs of litigation.

Recommended Citation: Ronald Mann, Opinion analysis: Court holds losers responsible for costs of debt-collection disputes., SCOTUSblog (Feb. 28, 2013, 5:07 PM),