United States Supreme Court Rejects Discovery Rule for Fair Debt Collection Practices Act, But Leaves Potential Fraud-Specific Discovery Rule for Another Day

Photo of Ryan M. Cunningham

The United States Supreme Court has agreed with the United States Court of Appeals for the Third Circuit, and resolved a circuit split with the Fourth and Ninth Circuits, holding that the Fair Debt Collection Practices Act, 15 U.S.C. §§ 1692, et seq. ("FDCPA") does not incorporate the discovery rule into its statute of limitations. Rotkiske v. Klemm, et al. 

The discovery rule alters statutes of limitation, delaying the running of those statutes until a plaintiff knows or reasonably should 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 had 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.

In Rotkiske, the Third Circuit, sitting en banc, declined to read the discovery rule into the FDCPA's statute of limitations, and the United States Supreme Court agreed to consider "[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."

Appellant Kevin Rotkiske argued for a fraud-specific application of the discovery rule. Writing for the Court, Justice Clarence Thomas affirmed the Third Circuit's holding that the FDCPA does not incorporate the discovery rule within its text. Justice Thomas wrote that Congress knows how to create a discovery rule and declined to do so in the FDCPA. While the Court acknowledged the potential for application of such an equitable rule, eight of the justices agreed that the Appellant had waived the argument by failing to raise it before the Court granted certiorari.

For now, the FDCPA does not incorporate the discovery rule into its statute of limitations. Left for another time, in a properly preserved argument, is whether an equitable discovery rule may apply in situations where the alleged violations of the FDCPA were concealed by fraud.

For more information about our banking law practice, please visit our banking law page. 

No Comments

Leave a comment
Comment Information
  • Super Lawyers
  • Best Lawyers | 2020
  • Preeminent AV | LexisNexis Martindale-Hubbell Peer Review Rated For Ethical Standards and Legal Ability