U.S. Supreme Court Holds That FDCPA Bona Fide Error Defense Does Not Apply to Mistake of Law
Yesterday, the United States Supreme Court held that the Fair Debt Collection Practices Act’s (“FDCPA”) bona fide error defense does not apply to mistakes of law, thus resolving a split among Circuit Courts of Appeal. In Jerman v. Carlisle, McNellie, Rini, Kramer & Ulrich LPA, a law firm sent a debtor a “validation notice” under the FDCPA mistakenly stating the debtor had to dispute the debt in writing. The FDCPA does not require a written dispute; therefore, the debtor filed a class action lawsuit claiming that the law firm violated the FDCPA.
Justice Sotomayor, writing for the majority, invoked the common maxim “that ignorance of the law will not excuse any person, either civilly or criminally.” The Supreme Court explained that the “law is no stranger” to the idea that actions may be deemed “intentional for the purposes of civil liability, even if the actor lacked actual knowledge.” In reaching this decision, the Court noted that Congress copied the relevant language of the bona fide error defense from the Truth in Lending Act (“TILA”), which was passed nine years prior to the FDCPA. The Supreme Court saw no reason to believe that Congress, when it enacted the FDCPA, disagreed with three federal court decisions holding that TILA’s bona fide error defense applied to clerical errors.
Justice Kennedy (joined by J. Alito) dissented, suggesting that the majority’s opinion could lead to the uncomfortable position of the attorney having to resolve any ambiguity in the law against his client to avoid potential liability for an error in interpretation. The majority rejected this concern, stating that a lawyer’s ethical duties to his clients are limited in numerous circumstances by his ethical duties to uphold the “laws and standards of professional conduct.” The majority also dismissed concerns that its decision would create a flood of litigation concerning errors in debt collections.