U.S. Supreme Court Finds that FDCPA’s Statute of Limitations Begins When the Alleged Violation Occurs

Ruling provides clarity on the nature of the statute of limitations under the FDCPA.

12/10/2019 10:00 AM

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U.S. Supreme Court Finds that FDCPA’s Statute of Limitations Begins When the Alleged Violation Occurs

The U.S. Supreme Court issued its decision in Rotkiske v. Klemm holding that, “Absent the application of an equitable doctrine, § 1692k(d)’s statute of limitations begins to run when the alleged Fair Debt Collection Practices Act violation occurs, not when the violation is discovered.”

As ACA International previously reported, the debt collector had attempted to sue the consumer for unpaid credit card debt and attempted to serve the consumer at an address where the consumer no longer lived. The debt collector withdrew the suit when it was unable to locate the consumer. In 2009, the debt collector refiled its suit and attempted service at the same address as before. Someone at the residence accepted service on the consumer’s behalf without the consumer’s knowledge. The consumer discovered the judgment against him in 2014 when he was rejected for a home loan.

In an en banc decision, the Third Circuit ruled that the statute of limitations under the FDCPA begins to run from “the date on which the violation occurred.”

The Third Circuit’s decision rejects the rulings of both the Fourth and the Ninth Circuits, which previously held that the statute of limitations under the FDCPA begins to run from the discovery of the violation. In its decision, the Third Circuit emphasized that, “our holding today does nothing to undermine the doctrine of equitable tolling. Indeed, we have already recognized the availability of equitable tolling for civil suits alleging an FDCPA violation.”

After the Third Circuit decision, the U.S. Supreme Court granted a request to review whether the “discovery rule” applies to toll the one-year statute of limitations under the Fair Debt Collection Practices Act.

The court found that because section 1692k(d) specifically states that an action “may be brought ... within one year from the date on which the violation occurs,” that Congress intended the limitation period to run on the date the alleged FDCPA violation occurred. Therefore, the consumer’s case was time barred under the FDCPA when he brought it to court. The court stated, “It is not our role to second-guess Congress’ decision to include a “violation occurs” provision, rather than a discovery provision, in § 1692k(d)… It is Congress, not this Court, that balances those interests. We simply enforce the value judgments made by Congress.”

The consumer also contended that his filing should be treated as timely under an equitable, fraud-specific discovery rule. The court refused to discuss this issue as the consumer did not raise the issue before the Third Circuit, nor did he raise it in his petition of certiorari. It is of note that Justice Ruth Bader Ginsburg dissented on this opinion in part. The opinion was delivered by Justice Clarence Thomas.

Providing industry insight on the case, Justin M. Penn, partner at member firm Hinshaw & Culberston LLP, said, "The Supreme Court's decision is extremely helpful for the industry, and all litigants, in that the court provided certainty in connection with a statute that involves tremendous uncertainty in other areas. The ruling could also have implications on class treatment of a challenge to the discovery rule, in light of the resulting need for individualized inquiries on the equitable principle of tolling based on the facts of each instance.”

ACA applauds the Supreme Court’s ruling on this issue, as it provides clarity on the nature of the statute of limitations under the FDCPA. It also resolves a circuit split, which can only create more uniformity in FDCPA litigation across the country. ACA supported this case as part of its Industry Advancement Program by filing an amicus brief with the court.


Follow ACA International on Twitter @ACAIntl and @acacollector, Facebook and request to join our LinkedIn group for news and event updates. ACA International members are welcome to submit news items for possible publication to comm@acainternational.org. Visit our publications page for news submission guidelines and subscriptions to ACA Daily, Collector magazine and Pulse.

Advertising is available for companies wishing to promote their products or services. Be sure to visit the ACA Events Calendar on the Education and Training page to view our listing of upcoming CORE Curriculum and Hot Topic seminars featuring critical educational opportunities for your company.


Subscribe to ACA Daily NEWSROOM

U.S. Supreme Court Finds that FDCPA’s Statute of Limitations Begins When the Alleged Violation Occurs

The U.S. Supreme Court issued its decision in Rotkiske v. Klemm holding that, “Absent the application of an equitable doctrine, § 1692k(d)’s statute of limitations begins to run when the alleged Fair Debt Collection Practices Act violation occurs, not when the violation is discovered.”

As ACA International previously reported, the debt collector had attempted to sue the consumer for unpaid credit card debt and attempted to serve the consumer at an address where the consumer no longer lived. The debt collector withdrew the suit when it was unable to locate the consumer. In 2009, the debt collector refiled its suit and attempted service at the same address as before. Someone at the residence accepted service on the consumer’s behalf without the consumer’s knowledge. The consumer discovered the judgment against him in 2014 when he was rejected for a home loan.

In an en banc decision, the Third Circuit ruled that the statute of limitations under the FDCPA begins to run from “the date on which the violation occurred.”

The Third Circuit’s decision rejects the rulings of both the Fourth and the Ninth Circuits, which previously held that the statute of limitations under the FDCPA begins to run from the discovery of the violation. In its decision, the Third Circuit emphasized that, “our holding today does nothing to undermine the doctrine of equitable tolling. Indeed, we have already recognized the availability of equitable tolling for civil suits alleging an FDCPA violation.”

After the Third Circuit decision, the U.S. Supreme Court granted a request to review whether the “discovery rule” applies to toll the one-year statute of limitations under the Fair Debt Collection Practices Act.

The court found that because section 1692k(d) specifically states that an action “may be brought ... within one year from the date on which the violation occurs,” that Congress intended the limitation period to run on the date the alleged FDCPA violation occurred. Therefore, the consumer’s case was time barred under the FDCPA when he brought it to court. The court stated, “It is not our role to second-guess Congress’ decision to include a “violation occurs” provision, rather than a discovery provision, in § 1692k(d)… It is Congress, not this Court, that balances those interests. We simply enforce the value judgments made by Congress.”

The consumer also contended that his filing should be treated as timely under an equitable, fraud-specific discovery rule. The court refused to discuss this issue as the consumer did not raise the issue before the Third Circuit, nor did he raise it in his petition of certiorari. It is of note that Justice Ruth Bader Ginsburg dissented on this opinion in part. The opinion was delivered by Justice Clarence Thomas.

Providing industry insight on the case, Justin M. Penn, partner at member firm Hinshaw & Culberston LLP, said, "The Supreme Court's decision is extremely helpful for the industry, and all litigants, in that the court provided certainty in connection with a statute that involves tremendous uncertainty in other areas. The ruling could also have implications on class treatment of a challenge to the discovery rule, in light of the resulting need for individualized inquiries on the equitable principle of tolling based on the facts of each instance.”

ACA applauds the Supreme Court’s ruling on this issue, as it provides clarity on the nature of the statute of limitations under the FDCPA. It also resolves a circuit split, which can only create more uniformity in FDCPA litigation across the country. ACA supported this case as part of its Industry Advancement Program by filing an amicus brief with the court.


Follow ACA International on Twitter @ACAIntl and @acacollector, Facebook and request to join our LinkedIn group for news and event updates. ACA International members are welcome to submit news items for possible publication to comm@acainternational.org. Visit our publications page for news submission guidelines and subscriptions to ACA Daily, Collector magazine and Pulse.

Advertising is available for companies wishing to promote their products or services. Be sure to visit the ACA Events Calendar on the Education and Training page to view our listing of upcoming CORE Curriculum and Hot Topic seminars featuring critical educational opportunities for your company.


Subscribe to ACA Daily NEWSROOM

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