District Court (Mich.) Grants Motion in Limine Precluding Debt Collector From Asserting Bona Fide Error Premised on Misinterpretation of Underlying State Law Regarding the Debt

Lacking binding authority directly on point, the Court concludes that an affirmative defense based on mistake of state law is not available to a defendant debt collector under Section 1692k. This is so because much of the Court’s reasoning in Jerman II applies in equal force to mistakes of state law as it does to mistakes of the FDCPA. During its analysis, the Court provided the following justifications:  (1) “the common maxim, familiar to all minds, that ignorance of the law will not excuse any person, either civilly or criminally” Jerman II, 559 U.S. at 581, 130 S.Ct. 1605 (quoting Barlow v. United States, 7 Pet. 404, 411, 32 U.S. 404, 8 L.Ed. 728 (1833).  (2) “[W]hen Congress has intended to provide a mistake-of-law defense to civil liability, it has often done so more explicitly than [under the FDCPA].” Id. at 583, 130 S.Ct. 1605.  (3) “Congress also did not confine liability under the FDCPA to “willful” violations, a term more often understood in the civil context to excuse mistakes of law.” Id. at 584, 130 S.Ct. 1605. (4) The statutory phrase “procedures reasonably adapted to avoid any such error” is “more naturally read to apply to processes that have mechanical or other such ‘regular orderly’ steps to avoid mistakes,” and “legal reasoning is not a mechanical or strictly linear process.” Id. at 587, 130 S.Ct. 1605.  (5) “[T]he uniform interpretations of three Courts of Appeals holding that the TILA defense does not extend to mistakes of law.” Id. at 591, 130 S.Ct. 1605.  (6) “[N]onlawyer debt collectors could obtain blanket immunity for mistaken interpretations of the FDCPA simply by seeking the advice of legal counsel.” Id. at 602, 130 S.Ct. 1605.  (7) Concern over an “enforcement gap” under a contrary reading, where “consumers will have little incentive to bring enforcement actions where the law is at all unsettled, because in such circumstances a debt collector could easily claim bona fide error of law.” Id. at 603, 130 S.Ct. 1605 (internal quotations omitted).  The Court discerns no reason why this analysis should not apply to mistakes of state law as well. The conclusion is consistent with several other courts, including one from this district, to have discussed the issue. In Harden, the district court reasoned that each of the above justifications “also apply to mistakes of state law.” Harden, 2016 WL 6997905, at *2. Similarly in McDermott v. Marcus, Errico, Emmer & Brooks, P.C., 911 F.Supp.2d 1, 82 (D. Mass. Nov. 20, 2012), the court found that the principles used in Jerman II “lead to the conclusion that section 1692k(2) does not encompass mistakes based on state law.” Id. The Court agrees that this conclusion is the best reading of the Jerman II decision as applied to mistakes of state law.  Defendant’s arguments to the contrary are not persuasive. Defendants point out there is more complexity to Michigan law than the FDCPA, and rely on an out of circuit district court decision that found “[t]he trend in the case law appears to be toward allowing the bona fide error defense where the law is not clear.” Gray v. Suttell & Associates, 123 F.Supp.3d 1283, 1289 (E.D. Wash. 2015). The cases cited in Gray, however, all predate the Supreme Court’s decision in Jerman II. See id. Furthermore, any additional complexities in state law are insufficient on this record to distinguish the principles articulated in Jerman II or the courts’ analyses in Harden and McDermott that found those principles bar debt collectors from raising a mistake of state law defense under Section 1692k.