United States Supreme Court to Consider Whether Fair Debt Collection Practices Act Subject to the Discovery Rule

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The United States Supreme Court has agreed to consider a case that could resolve a split among the United States Courts of Appeals as to whether the discovery rule applies to the Fair Debt Collection Practices Act, 15 U.S.C. §§ 1692, et seq. (“FDCPA”).  Rotkiske v. Klemm, et al., No. 18-328 (U.S., certiorari granted Feb. 25, 2019).

Plaintiff Kevin Rotkiske applied for a mortgage in 2014 and discovered an outstanding default judgment against him by Klemm & Associates (“Klemm”) from 2009.  Rotkiske sued Klemm, alleging violations of the FDCPA, within one year of discovering the default judgment, and argued that the discovery rule made his suit timely.  The United States District Court for the Eastern District of Pennsylvania declined to adopt the discovery rule for the FDCPA, and Rotkiske appealed.

The discovery rule alters statutes of limitations, delaying the running of those statutes until a plaintiff knows or has reason to know of the injury or violation that is the basis of his or her claim.  The United States Courts of Appeals for the Fourth and Ninth Circuits have previously held that the FDCPA does incorporate the discovery rule, such that the statute of limitations does not begin to run until the Plaintiff knows or should know of the injury.

The Third Circuit, sitting en banc, declined to read the discovery rule into the FDCPA’s statute of limitations.  The FDCPA’s statute of limitations states that an action may be brought “within one year from the date on which the violation occurs.”  15 U.S.C. § 1692k(d).  The Third Circuit determined that the statutory language was clear that the limitations period began to run with the violation, not the Plaintiff’s discovery of that violation.  “Because Rotkiske’s action was filed well after that period expired, his action was untimely.”  Rotkiske v. Klemm, 890 F.3d 422 (3d Cir. 2018).

The United States Supreme Court will now have the final word on whether the FDCPA incorporates the discovery rule into its statute of limitations, answering the question presented of “[W]hether the “discovery rule” applies to toll the one (1) year statute of limitations under the Fair Debt Collection Practices Act, 15 U.S.C. §§ 1692, et seq., as the Fourth and Ninth Circuits have held but the Third Circuit (sua sponte en banc) has held contrarily.”  Fitch Law Partners will continue to monitor developments in this area.

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