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Paul, Weiss Secures Unanimous Win in Supreme Court Case on the Scope of the FDCPA

The U.S. Supreme Court unanimously ruled in favor of Paul, Weiss client McCarthy & Holthus LLP. In Obduskey v. McCarthy Holthus LLP, the Court addressed whether the Fair Debt Collections Practices Act (FDCPA) generally exempts law firms and other entities that merely engage in nonjudicial foreclosure proceedings, a question on which the lower courts had been divided.

In an opinion echoing arguments made by Paul, Weiss attorneys on behalf of McCarthy & Holthus LLP, the Supreme Court held that entities that engage in nonjudicial foreclosure proceedings, in accordance with state law, are not thereby subject to the general provisions of the FDCPA. The Court identified three reasons for that result. First, it concluded that the structure and language of the FDCPA’s definition of “debt collector” strongly suggests that the term does not generally cover the mere enforcement of a security interest by initiating a nonjudicial foreclosure. Second, the Court explained that its reading of the statute avoids potential conflicts between the FDCPA and state nonjudicial foreclosure schemes. Third, the Court noted that its interpretation comports with the relevant legislative history.

The Paul, Weiss team included litigation partner Kannon Shanmugam, who presented oral argument before the Court, and counsel Masha Hansford.

March 20, 2019

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