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Supreme Court Grants Certiorari in FDCPA Statute of Limitation Case

Posted By USFN, Monday, March 25, 2019

By Damon Ellis
Brock and Scott, PLLS
USFN Member (AL, CT, FL, GA, MA, ME, MD, MI, NC, NH, OH, RI, SC, TN, VA, VT)


On February 25, 2019, the Supreme Court of the United States agreed to consider arguments in Rotkiske v. Klemm, --- S.Ct. ---, 2019 WL 886893 (Mem), 19 Cal. Daily Op. Serv. 1639.  This case is on appeal from the Third Circuit, which held, that the Fair Debt Collection Practices Act’s (“FDCPA”) “one-year limitations period begins to run when a would-be defendant violates the FDCPA, not when a potential plaintiff discovers or should have discovered the violation.”  Rotkiske v. Klemm, 890 F.3d 422, 425 (3d Cir. 2018).


Petitioner, Kevin Rotkiske (“Rotkiske”), accumulated credit card debt between 2003 and 2005.  In 2008, the debt was referred by Rotkiske’s lender to Respondent, Klemm & Associates (“Klemm”), for collection.  Klemm sued for payment in March 2008 in Philadelphia Municipal Court, attempting service at an address where Rotkiske no longer resided.  The suit was thereafter withdrawn, when Rotkiske could not be located.  Klemm refiled in January 2009, again attempting service at the same address.  Unbeknownst to Rotkiske, an individual at that address accepted service on his behalf, and Klemm obtained a default judgment.  Rotkiske discovered the judgment when applying for a mortgage in September 2014.


On June 29, 2015, Rotkiske sued Klemm, and related individuals and entities, in the United States District Court for the Eastern District of Pennsylvania, averring that the above-referenced conduct violated the FDCPA.  Klemm moved to dismiss, arguing that Rotkiske filed after the expiration of the FDCPA’s one-year limitation period.  See 15 U.S.C. § 1692k(d) (“An action to enforce any liability created by this subchapter may be brought . . . within one year from the date on which the violation occurs”).  Rotkiske countered that his suit was timely, notwithstanding the one-year limitation period, because the “discovery rule” delays the beginning of some statutory limitation periods until plaintiff knew or should have known of the violation.  The district court rejected this argument, finding that the plain language of § 1692k(d) controls and denied a parallel argument that the limitation period should be equitably tolled, in the absence of active misleading by Klemm.  See Rotkiske v. Klemm, 2016 WL 1021140 (E.D. Pa. 2016).


Only the rejection of the “discovery rule” argument by the district court was appealed to the Third Circuit, Rotkiske did not challenge the district court’s finding that he had failed to allege active concealment by Klemm in denying his equitable tolling claim.  On appeal, the Third Circuit agreed with Klemm, holding, “[c]ivil actions alleging violations of the Fair Debt Collection Practices Act must be filed within one year from the date of the violation.”  Rotkiske v. Klemm, 890 F.3d at 429.  In so doing, the Third Circuit declined Rotkiske’s invitation to follow opinions of the Ninth (Mangum v. Action Collection Service, Inc., 575 F.3d 935 (9th Cir. 2009)) and Fourth Circuits (Lembach v. Bierman, 528 Fed.Appx. 297 (3d Cir. 2013)) that have previously applied the “discovery rule” to the FDCPA.  The Third Circuit opted instead to rely on guidance from the United States Supreme Court in a Fair Credit Reporting Act case, TRW Inc. v. Andrews, 534 U.S. 19, 28, 122 S.Ct. 441, 151 L.Ed.2d 339 (2001), where the Court held that Congress had “implicitly excluded a general discovery rule by explicitly including a more limited one.”  534 U.S. at 28, 122 S.Ct. 441.  The Third Circuit, parsing the express language of 15 U.S.C. § 1692k(d), concluded that, “[t]he same natural reading applies to the FDCPA in this appeal: Congress’s explicit choice of an occurrence rule implicitly excludes a discovery rule.”  Rotkiske v. Klemm, 890 F.3d at 426.


By granting certiorari and agreeing to hear arguments, the Supreme Court may provide some much-needed clarity on the applicability of the “discovery rule” to the FDCPA, thereby eliminating the existing inter-district conflict.  In the interim, debt collectors should be mindful of the Third Circuit’s holding, now on appeal, and be prepared to utilize the same in response to arguments that the “discovery rule” applies to the FDCPA’s statute of limitations in 15 U.S.C. § 1692k(d).

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