Blatt, Hasenmiller, Leibsker & Moore LLC v. Ronald Oliva

The Fair Debt Collection Practices Act contains a “bona fide error” defense, 15 U.S.C. § 1692k(c), which states that a debt collector “may not be held liable in any action brought under this subchapter if the debt collector shows by a preponderance of 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.” In Jerman v. Carlisle, McNellie, Rini, Kramer & Ulrich, L.P.A., 559 U.S. 573 (2010), this Court decided that the bona fide error defense does not apply to a violation resulting from a debt collector’s mistaken interpretation of the Act. Justice Kennedy’s dissent, joined by Justice Alito, predicted that Jerman’s holding would expose debt collectors to liability “where a particular practice is compelled by existing [court] precedent . . . if that precedent is later overturned,” and result in punishment “for advocacy reasonably deemed to be in compliance with the law or even required by it.” 559 U.S. at 621, 622 (Kennedy, J., dissenting). The dissent’s prophesy has just come true. The debt collector in this case chose the venue for a debt collection action based on an 18-year old controlling circuit precedent that expressly provided a “safe harbor” interpretation of the FDCPA’s venue provision. In a sharply divided (7-4) en banc decision, the court of appeals, citing Jerman, held that the debt collector’s reliance on the circuit’s controlling precedent was a punishable “mistake of law” because, after the debt collection action was filed, the court overturned its interpretation of the venue provision and made the debt collector’s choice of venue retroactively erroneous, exactly as Justice Kennedy predicted. (i)