Jerman v. Carlisle, McNellie, Rini, Kramer & Ulrich LPA

The law firm Carlisle, McNellie, Rini, Kramer & Ulrich LPA (the firm) (defendant) initiated a foreclosure action on behalf of a client against Karen L. Jerman (plaintiff). The firm sent Jerman a document that stated that her mortgage debt would be assumed to be valid unless she contested the debt. Jerman contested the debt, claiming that she had already paid it. After consulting with their client, the firm determined that Jerman had already paid her debt and withdrew its foreclosure action. Jerman filed a lawsuit against the firm in federal district court, alleging that the firm had violated the Fair Debt Collection Practices Act (FDCPA) by stating that her debt would be assumed to be valid unless she contested it. The district court granted summary judgment for the firm, holding that the firm had violated the FDCPA but was shielded from liability under the FDCPA’s bona fide error defense. At 15 U.S.C. § 1692k(c), the FDCPA provided debt collectors with a bona fide error defense that removed liability against debt collectors who unintentionally violated the FDCPA through some bona fide error despite having procedures in place that were meant to prevent such an error. The court reasoned that the firm made a bona fide error by incorrectly interpreting the law. The court of appeals affirmed the district court, holding that mistakes of law could qualify as bona fide errors under the FDCPA. Jerman appealed. The United States Supreme Court granted certiorari.