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
54(d)(1).

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,
C. J., and SCALIA, KENNEDY, GINSBURG, BREYER, and ALITO, JJ., joined.
SOTOMAYOR, J., filed a dissenting opinion, in which KAGAN, J., joined.
click here for full opinion:

http://www.supremecourt.gov/opinions/12pdf/11-1175_4fc5.pdf

"Defalcation" in context of bankruptcy discharge defined by the Supreme Court in Bullock v. Bankchampaign, N.A. May 13, 2013

Click here for the full decision:

http://www.supremecourt.gov/opinions/12pdf/11-1518_97be.pdf

Petitioner’s father established a trust for the benefit of petitioner and his siblings, and made petitioner the (nonprofessional) trustee. The trust’s sole asset was the father’s life insurance policy. Petitioner borrowed funds from the trust three times; all borrowed funds were repaid with interest. His siblings obtained a judgment against him in state court for breach of fiduciary duty, though the court found no apparent malicious motive. The court imposed constructive trusts on certain of petitioner’s interests—including his interest in the original trust—in order to secure petitioner’s payment of the judgment, with respondent serving as trustee for all of the trusts. Petitioner filed for bankruptcy. Respondent opposed discharge of petitioner’s state court-imposed debts to the trust, and the Bankruptcy Court granted respondent summary judgment, holding that petitioner’s debts were not dischargeable pursuant to 11 U. S. C. §523(a)(4), which provides that an individual cannot obtain a bankruptcy discharge from a debt“for fraud or defalcation while acting in a fiduciary capacity, embezzlement, or larceny.”  The Federal District Court and the Eleventh Circuit affirmed. The latter court reasoned that “defalcation requires a known breach of fiduciary duty, such that the conduct can be characterized as objectively reckless.”
Held: The term “defalcation” in the Bankruptcy Code includes a culpable state of mind requirement involving knowledge of, or gross recklessness in respect to, the improper nature of the fiduciary behavior.

(a) While “defalcation” has been an exception to discharge in a bankruptcy statute since 1867, legal authorities have long disagreed about its meaning. Broad definitions of the term in modern and older
dictionaries are unhelpful, and courts of appeals have disagreed about what mental state must accompany defalcation’s definition.

(b) In Neal v. Clark, 95 U. S. 704, this Court interpreted the term “fraud” in the Bankruptcy Code’s exceptions to discharge to mean “positive fraud, or fraud in fact, involving moral turpitude or intentional wrong, as does embezzlement; and not implied fraud, or fraud in law, which may exist without the imputation of bad faith or immorality.” Id., at 709. The term “defalcation” should be treated similarly. Thus, where the conduct at issue does not involve bad faith, moral turpitude, or other immoral conduct, “defalcation” requires an intentional wrong. An intentional wrong includes not only conduct that the fiduciary knows is improper but also reckless conduct of the kind that the criminal law often treats as the equivalent. Where actual knowledge of wrongdoing is lacking, conduct is considered as equivalent if, as set forth in the Model Penal Code, the fiduciary “consciously disregards,” or is willfully blind to, “a substantial and unjustifiable risk” that his conduct will violate a fiduciary duty.

(c) Several considerations support this interpretation.

First, statutory context strongly favors it. The canon noscitur a sociis argues for interpreting “defalcation” as similar to its linguistic neighbors “embezzlement,” “larceny,” and “fraud,” which all require a showing of wrongful or felonious intent. See, e.g., Neal, supra, at 709.

Second, the interpretation does not make the word identical to its statutory neighbors. “Embezzlement” requires conversion, “larceny” requires taking and carrying away another’s property, and “fraud” typically
requires a false statement or omission; while “defalcation” can encompass a breach of fiduciary obligation that involves neither conversion, nor taking and carrying away another’s property, nor falsity.

Third, the interpretation is consistent with the longstanding principle that “exceptions to discharge ‘should be confined to those plainly expressed.’ ” Kawaauhau v. Geiger, 523 U. S. 57, 62.
It is also consistent with statutory exceptions to discharge that Congress normally confines to circumstances where strong, special policy considerations,such as the presence of fault, argue for preserving the debt, thereby benefiting, for example, a typically more honest creditor. See, e.g., 11 U. S. C. §523(a)(2)(A).

Fourth, some Circuits have interpreted the statute similarly for many years without administrative or other difficulties. Finally, it is important to have a uniform interpretation of federal law, the choices are limited, and neither the parties nor the Government has presented strong considerations favoring a different

Vacated and remanded.
BREYER, J., delivered the opinion for a unanimous Court.