Alert August 21, 2012

CFPB, FTC and DOJ File Joint Amicus Brief Related to Debtor Actions Under FDCPA

The CFPB, DOJ and FTC filed a joint amicus brief urging the Supreme Court to overturn a Tenth Circuit appellate decision upholding an award of costs to the defendant under Federal Rule of Civil Procedure 54(d), despite not finding that the debtor’s Fair Debt Collection Practices Act claims were brought in bad faith or to harass. The lower court awarded costs to defendant as part of its dismissal order and also rejected debtor’s post-judgment motion objecting to the award of costs. In upholding the lower court opinion, the Tenth Circuit noting that neither the text nor the legislative history of the FDCPA reflects a clear congressional intent to displace the Federal Rules of Civil Procedure regarding the award of costs to the prevailing party.

The FDCPA’s cost-shifting provision authorizes a court to award attorney’s fees to a defendant upon a finding that the action “was brought in bad faith and for the purpose of harassment.” In their amicus brief, the FTC, DOJ and CFPB argue that Rule 54(d), which permits the award of costs to a prevailing party, does not supersede the FDCPA’s cost-shifting language, as evidenced by the text of the Rule, which only allows costs in the absence of a federal statute establishing a different cost-shifting standard. Moreover, the agencies argued that to interpret the Federal Rules of Civil Procedure otherwise would “upset the balance” between encouraging private enforcement and deterring abusive suits and “frustrate the [FDCPA’s] goal of discouraging and remedying abusive debt-collection practices."