Jerman v. Carlisle: misreading the law is not a bona fide error
A law firm filed a foreclosure on a mortgage that had already been paid in full, with a notice telling the homeowner she had to dispute the debt in writing. When she sued under the FDCPA, the firm said any violation was an honest mistake about what the law required. On April 21, 2010, the Supreme Court held seven to two that the Act's bona fide error defense does not cover a collector's mistaken reading of the law.
A public record, not a client of this firm. Everything on this page comes from the Supreme Court's opinion cited at the end. The Court decided a question of law and sent the case back; it did not award damages. Usher Law Group did not represent anyone in this matter, we publish no results of our own, and nothing here predicts the outcome of any other case.
In April 2006, the Ohio law firm Carlisle, McNellie, Rini, Kramer & Ulrich filed a foreclosure complaint in state court for its client, Countrywide Home Loans. The property belonged to Karen L. Jerman.
The complaint came with a notice. It said the mortgage debt would be assumed valid unless Jerman disputed it in writing. Her lawyer sent a letter disputing it. The firm asked Countrywide to verify the debt, and Countrywide acknowledged that Jerman had already paid it in full. The firm withdrew the foreclosure.
Jerman then sued the firm and the attorney who handled the case under the Fair Debt Collection Practices Act, seeking damages and class certification. Her claim was about the notice. The Act requires a collector to tell the consumer that the debt will be assumed valid unless the consumer disputes it within thirty days (15 U.S.C. § 1692g(a)(3)). That part of the statute says nothing about writing. By adding "in writing," she argued, the firm misstated her rights.
The defense
The district court in Ohio, noting that courts were divided, agreed with Jerman that the notice violated the Act. But it then ruled for the firm anyway, under the Act's bona fide error defense.
That defense says a debt collector is not liable if it shows, by a preponderance of the evidence, that "the violation was not intentional and resulted from a bona fide error notwithstanding the maintenance of procedures reasonably adapted to avoid any such error" (15 U.S.C. § 1692k(c)). The firm's position was that it had honestly believed the law allowed the "in writing" language, so the violation was a good-faith mistake.
The Sixth Circuit affirmed. It held the defense is not limited to clerical or factual errors and extends to mistakes of law. The Supreme Court took the case.
What the Court did
On April 21, 2010, the Court reversed, seven to two, in an opinion by Justice Sotomayor. Justice Kennedy, joined by Justice Alito, dissented.
- The old maxim. The Court relied on the "common maxim, familiar to all minds, that ignorance of the law will not excuse any person, either civilly or criminally." When Congress wants to excuse legal mistakes, it usually says so more clearly.
- The contrast with FTC penalties. The FDCPA incorporates the FTC Act's civil penalties, but those apply only when a collector acts with actual or fairly implied knowledge that its conduct is prohibited. Congress wrote no such knowledge requirement into the consumer's damages remedy.
- The words "procedures reasonably adapted." A procedure to avoid an error most naturally means a mechanical or orderly process to catch clerical or factual mistakes, not legal analysis.
- A separate safe harbor. The Act already protects a collector that acts in good faith in conformity with a Federal Trade Commission advisory opinion (§ 1692k(e)). That provision, not the bona fide error defense, is the one aimed at legal uncertainty.
The firm warned that the ruling would expose lawyers who collect debts to liability for every unsettled legal question. The Court answered that the Act has limits built in. Statutory damages in an individual case are capped at $1,000, courts must weigh how frequent, persistent and intentional the noncompliance was, and courts have discretion over fees. It pointed to a case where a court awarded a $500 fee, rather than the full amount claimed, for a technical violation that recovered $50. Policy arguments beyond that, the Court said, belong to Congress.
The case went back to the lower courts. The Supreme Court expressly did not decide whether the "in writing" language itself violated the Act, because that question was not before it. This page does not report what happened on remand.
What it means for you now
Collectors and their lawyers often answer an FDCPA claim by calling the violation an honest mistake. After Jerman, that answer works only for the kind of mistake a good system should catch, like a typo or a mismatched account, and only if the collector proves it had such a system. A collector that sends a letter because it read the law wrong cannot use the defense. Our FDCPA guide covers what the Act requires.
- Keep the letter and the envelope. Whether a notice misstates your rights is decided from its words. The date you received it starts the thirty-day validation period.
- Dispute in writing anyway. Whatever a notice says, a written dispute within thirty days entitles you to verification of the debt (§ 1692g(a)(4), (b)). Our page on missing or defective validation notices explains the rules.
- If you have been sued, do not ignore the papers. Jerman began with a foreclosure on a debt already paid. The answer deadline is short. Read sued by a debt collector.
- Watch the one-year clock. An FDCPA claim must be filed within one year of the violation (§ 1692k(d)).
The FDCPA requires a collector found liable to pay the consumer's reasonable attorney's fees and costs. In New York, New Jersey and Florida, state law adds its own rules; see our New York, New Jersey and Florida pages.
The pages this story points to
No validation notice
What the first letter must say, and what to do when it is wrong.
Read →Who is a debt collector
Agencies, debt buyers and the law firms that sue.
Read →Heintz v. Jenkins
The 1995 ruling that collection lawyers must follow the FDCPA.
Read →Sources. Jerman v. Carlisle, McNellie, Rini, Kramer & Ulrich LPA, 559 U.S. 573 (2010), No. 08-1200, opinion (Cornell LII) and syllabus; 15 U.S.C. § 1692g; 15 U.S.C. § 1692k.
Common questions
What is the bona fide error defense?
The FDCPA says a debt collector is not liable if it shows the violation was not intentional and resulted from a bona fide error despite procedures reasonably adapted to avoid that error. Jerman holds that the defense covers mistakes like clerical or factual errors, not a collector's mistaken interpretation of what the FDCPA requires.
Do I have to dispute a debt in writing?
The Supreme Court did not decide that question in Jerman. Courts have disagreed about whether a validation notice may require a written dispute. The Third Circuit, which covers New Jersey, has said a dispute must be in writing to be effective under the validation provisions. Disputing in writing is the safer course everywhere, and it leaves a record.
Does this mean every technical mistake leads to a large award?
No. The Court pointed out that statutory damages in an individual case are capped at $1,000, that courts weigh how frequent, persistent and intentional the noncompliance was, and that courts have discretion over fee awards. The ruling removes one defense; it does not set the amount of any recovery.
Tell us what they did.
One conversation with an attorney, in your language. We tell you which laws the collector or the credit bureau broke, which deadline runs first, and what to save this week. If it is not a case we can take, we say so and tell you where to go.
(718) 484-7510The FDCPA and the FCRA require a company found liable to pay the consumer’s reasonable attorney’s fees and costs. Our fee arrangement is confirmed in a written retainer before we begin. English, Russian and Spanish in-house; an interpreter for any other language.