Supreme Court Decides Jerman v. Carlisle, McNellie, Rini, Kramer & Ulrich LPA

On April 21, the Supreme Court decided Jerman v. Carlisle, McNellie, Rini, Kramer & Ulrich LPA, No. 08-1200, holding that the provision of the Fair Debt Collection Practices Act ("FDCPA") excusing a debt collector from liability for violations resulting from "a bona fide error" does not apply where the error involves a mistake of law.

A law firm filed a lawsuit to foreclose a mortgage held by its client on property owned by Karen Jerman. The complaint included a "notice" stating that the mortgage debt would be assumed to be valid unless Jerman disputed it in writing. Jerman's lawyer sent a letter disputing the debt, the law firm's client determined that the debt in fact had been paid, and the law firm withdrew the lawsuit. Jerman then sued the firm, seeking class certification and damages based on her claim that the firm had violated the FDCPA by requiring her to dispute her debt in writing. The district court found that the law was unclear whether this conduct violated the FDCPA, but ultimately held that it did. Nevertheless, it granted summary judgment for the firm based on 15 U.S.C. § 1692k(c), which excuses a debt collector's violation if the violation "was not intentional and resulted from a bona fide error notwithstanding the maintenance of procedures reasonably adapted to avoid any such error." The Sixth Circuit affirmed.

The Supreme Court reversed, holding that the "bona fide error" defense under FDCPA does not include an error of law concerning the FDCPA's requirements. It held that such an error can never be "not intentional," citing the maxim that ignorance of the law is not an excuse for failing to comply with it. When Congress has intended to provide a mistake-of-law defense to civil liability, it has done so using more explicit language than was used in the FDCPA provision—for example, by providing that liability attaches only to "willful" violations. Section 1692k(c)'s requirement that a debt collector maintain procedures to avoid an error also fits more naturally with clerical or factual errors than with errors of legal interpretation. The Court also found support for its conclusion in the legislative history of the FDCPA and in the fact that another section excuses liability for "any act done or omitted in good faith in conformity with" an FTC advisory opinion.

Justice Sotomayor delivered the opinion of the Court, in which Chief Justice Roberts and Justices Stevens, Thomas, Ginsburg, and Breyer joined. Justices Breyer also filed a concurring opinions. Justice Scalia filed an opinion concurring in part and concurring in the judgment. Justice Kennedy filed a dissenting opinion, in which Justice Alito joined.

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