N.D. Ohio Notes Split Re Whether Bona Fide Error Defense Applies to Mistakes of Law; Sides with Courts Holding in the Affirmative

Per Jerman v. Carlisle, McNellie, Rini, Kramer & Ulrich, Slip Copy, 2007 WL 1795981 (N.D.Ohio Jun 20, 2007):

As one court has recognized,

"There is a split of authority among the circuits as to whether the bona fide error defense applies to mistakes of law. The majority view is that the defense is only available for clerical and factual errors. See, e.g., Picht v. Jon R. Hawks, Ltd., 236 F.3d 446, 451-52 (8th Cir.2001); Pipiles v. Credit Bureau of Lockport, Inc., 886 F.2d 22, 27 (2nd Cir.1989); Baker v. G.C. Servs. Corp., 677 F.2d 775, 779 (9th Cir.1982)."

Nielsen v. Dickerson, 307 F.3d 623 (7th Cir.2002). That court also pointed out, however, that "a growing minority of courts ... have concluded that mistakes of law can be considered bona fide errors under § 1692k(c)." Id. In particular, Johnson v. Riddle, 305 F.3d 1107 (10th Cir.2002), held that the bona fide error defense is applicable to mistakes of law and collected the cases finding the same.

As for the Sixth Circuit, plaintiff relies on the decision of Smith v. Transworld Systems, Inc., 953 F.2d 1025 (6th Cir.1992), which recognized that the bona fide error defense protects a debt collector from liability due to a clerical error. The case undoubtedly involved a clerical error. The majority of the court in that decision did not address whether the bona fide error defense applied to mistakes of law as well as clerical errors. Rather, plaintiff cites to the statement of Judge Krupansky, who concurred in part and dissented in part, that "the bona fide error defense applies only to clerical errors." Judge Krupansky did not analyze the issue but merely cited to Baker v. G.C. Servs. Corp., supra.

The Ninth Circuit's opinion in Baker, the first appellate precedent on this point, looked principally to the cases that had uniformly construed the Truth-in-Lending Act's ("TILA") bona fide error provision ... not to immunize legal errors. The TILA provision, however, expressly states that 'an error of legal judgment with respect to a person's obligations under this subchapter is not a bona fide error.' It also includes an illustrative list of errors that would constitute bona fide errors, including 'clerical, calculation, computer malfunction and programming, and printing errors.' By contrast, the FDCPA's provision does not expressly remove legal mistakes from the realm of errors that can be considered bona fide, nor does it in any other way illustrate what types of mistakes can or cannot be deemed bona fide.

The "growing majority of courts" finding that mistakes of law can be considered bona fide errors note this distinction between the two statutory provisions.

Of the cases which hold that the defense does not apply to mistakes of law, almost all dispense with the issue by citing earlier cases back to the Ninth Circuit's decision in Baker v. G.C. Servs. Corp., [supra] Baker rested its holding entirely upon the similarity of the FDCPA bona fide error defense to the 'nearly identical' bona fide error defense provided in the [TILA], a provision uniformly interpreted to apply only to clerical errors and not to legal errors. However, the TILA analogy is faulty, as the Seventh Circuit has explained:

[The plaintiff] also analogizes the provision to a similar section in [TILA] which is limited to clerical mistakes and which does not include errors of judgment or law. But ... the TILA bona fide error provision expressly defined bona fide errors as [including, but not limited to,] 'clerical, calculation, computer malfunction and programming, and printing errors, except that an error of legal judgment with respect to a person's obligations under this subchapter is not a bona fide error.' The FDCPA provision does no such thing. This, along with the statutes' different purposes, distinguishes the two.

Jenkins v. Heintz, 124 F.3d 824, 832 n. 7 (7th Cir.1997). Unlike TILA, the plain language of the FDCPA suggests no intent to limit the bona fide error defense to clerical errors. To the contrary, § 1692k(c) refers by its terms to any 'error' that is 'bona fide.' We find no indication in the legislative history that Congress intended this broad language to mean anything other than what it says. Id. at 1122-1123.

This Court agrees with this reasoning and, accordingly, finds that the bona fide error defense applies to mistakes of law.