U.S. Supreme Court Agrees to Resolve Circuit Split on When the Limitations Period for FDCPA Claims Should Start

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As we predicted last year, the United States Supreme Court earlier this week granted Plaintiff's petition for certiorari in Rotkiske v. Klemm to resolve a split in the circuits on whether the statute of limitations for a Fair Debt Collection Practices Act (FDCPA) claim begins when the alleged violation occurred (known as the "occurrence rule") or when the consumer discovers the alleged violation (known as the "discovery rule").

In Rotkiske v. Klemm, the Third Circuit ruled that the text of the FDCPA requiring actions to be brought within one year of the "date on which the violation occurs" mandated application of the occurrence rule. 15 U.S.C. § 1692k(d). That was a significant departure from the United States Courts of Appeals for the Fourth and Ninth Circuits' application of the discovery rule based on the legislative history and intent of the FDCPA. See Lembach v. Bierman, 528 F. App'x 297 (4th Cir. 2013) (per curiam); Mangum v. Action Collection Serv., Inc., 575 F.3d 935 (9th Cir. 2009).

As discussed further here, the debtor in Rotkiske alleged that the defendant law firm violated the FDCPA by erroneously obtaining a default judgment against him in 2009, when it knowingly served him at an improper address. The debtor alleged, however, that he did not discover the judgment until September 2014, when he was denied a mortgage loan based on the judgment, and that he timely filed his claim in June 2015, within the one-year statute of limitations under the FDCPA.

The Third Circuit, en banc, affirmed the District Court's dismissal and disagreed with the Fourth and Ninth Circuit opining that, "statutory interpretation… begins with the text" of the statute and here, "the Act says what it means and means what it says: the statute of limitations runs from the "date on which the violation occurs." According to the Third Circuit, Congress's legislative intent for statutes of limitations is to "fix an end point for civil liability" and while both the "discovery rule" and "occurrence rule" are proper, sometimes, like here, Congress "clearly picks one model of accrual over another."

By granting Rotksike's petition for certiorari, the United State Supreme Court has acknowledged the importance of resolving the split in the circuits regarding this critical statutory interpretation of the FDCPA.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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