Litigation

Attorneys not subject to sanctions under the Fair Debt Collection Practices Act

By Matt Hedberg

The Ninth Circuit Court of Appeals last week addressed the scope of sanctions for bad faith claims under the Fair Debt Collections Practices Act ("FDCPA").  A California plaintiff brought suit against two companies for violations of the FDCPA.  The plaintiff lost the suit, and the federal district court awarded attorney's fees and costs against the both plaintiff and his lawyers, finding that the lawsuit had been filed in bad faith and for the purpose of harassment as defined by the FDCPA.  The plaintiff's attorneys appealed.

On June 9, the Ninth Circuit issued its opinion in Hyde v. Midland Credit Management, Inc., holding that even if an FDCPA case is brought in bad faith and for the purpose of harassment, attorney's fees and costs cannot be awarded against the plaintiff's attorney under the FDCPA.

While the FDCPA does provide for an award of attorney's fees and costs against an unsuccessful abusive plaintiff, the Ninth Circuit looked at laws the FDCPA is modeled after and determined that Congress did not intend to allow fee awards against an attorney.  The Court reasoned that, had Congress intended to allow direct sanctions against an attorney, it would have explicitly said so.  The Court noted that there are other laws and rules by which courts can penalize attorneys directly.

Full post as published by Northwest Business Litigation Blog on June 19, 2009 (boomark / email).