Tuesday, July 2, 2013

Supreme Court in Marx v. General Revenue Corp.: Award of Costs and Fees under FDCPA and Costs under Fed.R.Civ.P. 54(d)(1)

Petitioner Marx filed suit, alleging that General Revenue Corporation (GRC) violated the Fair Debt Collection Practices Act (FDCPA) by harassing and falsely threatening her in order to collect on a debt.
The District Court ruled against Marx and awarded GRC costs pursuant to Federal Rule of Civil Procedure (FRCP) 54(d)(1), which gives district courts discretion to award costs to prevailing defendants
“[u]nless a federal statute . . . provides otherwise.” Marx sought to vacate the award, arguing that the court’s discretion under Rule 54(d)(1) was displaced by 15 U. S. C. §1692k(a)(3), which provides, in pertinent part, that “[o]n a finding by the court that an action under this section was brought in bad faith and for the purpose of harassment, the court may award to the defendant attorney’s fees reasonable in relation to the work expended and costs.” The District Court rejected Marx’s argument. The Tenth Circuit affirmed, in pertinent part, agreeing that costs are allowed under the Rule and concluding that nothing in the statute’s text, history, or purpose indicates that it was meant to displace the Rule.
Held: Section §1692k(a)(3) is not contrary to, and, thus, does not displace a district court’s discretion to award costs under, Rule 54(d)(1).

(a) Rule 54(d)(1) gives courts discretion to award costs to prevailing parties, but this discretion can be displaced by a federal statute or FRCP that “provides otherwise,” i.e., is “contrary” to Rule 54(d)(1).
Contrary to the argument of Marx and the United States, as amicus, language of the original 1937 version of the Rule does not suggest that any “express provision” for costs should displace Rule 54(d)(1),
regardless of whether it is contrary to the Rule.

(b) Section 1692k(a)(3)’s language and context demonstrate that the provision is not contrary to Rule

GRC argues that since §1692k(a)(3) does not address whether costs may be awarded in an FDCPA case brought in good faith, it does not set forth a standard that is contrary to the Rule and therefore does not displace the presumption that a court has discretion to award costs. Marx and the United States concede that the statute does not expressly limit a court’s discretion to award costs under the Rule, but argue that it does so by negative implication. They claim that unless §1692k(a)(3) sets forth the exclusive basis on which to award costs, the phrase “and costs” would be superfluous with Rule 54(d)(1). And the United States also argues that §1692k(a)(3)’s more specific cost statute displaces Rule 54(d)(1)’s more general rule.

The argument of Marx and the United States depends critically on whether §1692k(a)(3)’s allowance of costs creates a negative implication that costs are unavailable in any other circumstances. The expressio unius canon that they invoke does not apply “unless it is fair to suppose that Congress considered the unnamed possibility and meant to say no to it,” Barnhart v. Peabody Coal Co., 537 U. S. 149, 168, and can be overcome by “contrary indications that adopting a particular rule or statute was probably not meant to signal any exclusion,” United States v. Vonn, 535 U. S. 55, 65. Here, context indicates that Congress did not intend §1692k(a)(3) to foreclose courts from awarding costs under the Rule.

First, under the American Rule, each litigant generally pays his own attorney’s fees, but the Court has long recognized that federal courts have inherent power to award attorney’s fees in a narrow set of circumstances, e.g., when a party brings an action in bad faith. The statute is thus best read as codifying a court’s pre-existing authority to award both attorney’s fees and costs.

Next, §1692k(a)(3)’s second sentence must be understood in light of its first, which provides an award of attorney’s fees and costs,but to prevailing plaintiffs. By adding “and costs” to the second sentence, Congress foreclosed the argument that defendants can only recover attorney’s fees when plaintiffs bring an action in bad faith and removed any doubt that defendants may recover costs as well as attorney’s fees in such cases.

Finally, §1692k(a)(3)’s language sharply contrasts with that of other statutes in which Congress has placed
conditions on awarding costs to prevailing defendants. See, e.g., 28 U. S. C. §1928. Pp. 9–12.

Even assuming that their surplusage argument is correct, the canon against surplusage is not absolute. First, the canon “assists only where a competing interpretation gives effect to every clause and word of a statute.” Microsoft Corp. v. i4i Ltd. Partnership, 564 U. S. ___, ___. Here, no interpretation of §1692k(a)(3) gives effect to every word. Second, redundancy is not unusual in statutes addressing costs. See, e.g., 12 U. S. C. §2607(d)(5). Finally, the canon is strongest when an interpretation would render superfluous another
part of the same statutory scheme. Because §1692k(a)(3) is not part
of Rule 54(d)(1), the force of this canon is diminished.

Lastly, contrary to the United States’ claim that specific costshifting standards displace general ones, the context of the statute indicates that Congress was simply confirming the background presumption that courts may award to defendants attorney’s fees and costs when the plaintiff brings an action in bad faith. Because Marx did not bring this suit in bad faith, the specific provision is not applicable.
668 F. 3d 1174, affirmed.

THOMAS, J., delivered the opinion of the Court, in which ROBERTS,
SOTOMAYOR, J., filed a dissenting opinion, in which KAGAN, J., joined.
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