News & Views

Supreme Court Rejects Discovery Rule in FDCPA Cases

The United States Supreme Court has affirmed the Third Circuit Court of Appeals’ decision in Rotkiske v. Klemm, holding that Section 1692k(d) of the FDCPA “unambiguously sets the date of the violation as the event that starts the one-year limitations period.” The decision overrules cases from multiple circuits that have allowed application of the “discovery rule” in FDCPA cases.

The underlying facts are fairly straightforward: Rotkiske sued Klemm (a law firm) under the FDCPA alleging that Klemm filed its debt collection lawsuit beyond the state’s statute of limitations.  Rotkiske claimed that because of defective service he was not aware of the underlying collection lawsuit and subsequent default judgment until almost five years later. Once he became aware of the default judgment Rotkiske sued. Klemm moved to dismiss the FDCPA suit based on the fact that the alleged violation occurred more than one year before the date Rotkiske filed his suit.  The Eastern District of Pennsylvania dismissed the lawsuit and the Third Circuit Court of Appeals upheld the dismissal.  Rotkiske’s appeal to the Supreme Court followed.

The opinion of the Supreme Court, delivered by Justice Thomas, is the latest example of the Supreme Court declining to depart from traditional methods of statutory construction in interpreting the FDCPA.  The Court employed similar statutory construction methodology in Obduskey v. McCarthy & Holthus LLP, 139 S. Ct. 1029 (2019); Henson v. Santander, 137 S. Ct. 1718 (2017); and Sheriff v. Gillie, 136 S. Ct. 1594 (2016).  In each of those decisions, the Court stuck closely to the words Congress drafted and consistently refused to stray from the statutory language – an approach that resulted in favorable outcomes for the FDCPA defendants.

In this short opinion, the Court refused to read into the FDCPA a “discovery rule” as advocated by Rotkiske.  “It is not our role to second-guess Congress’ decision to include a ‘violation occurs’ provision, rather than a discovery provision, in § 1692k(d).”   The “discovery rule” argument was the argument Rotkiske preserved on appeal and included in his petition for a writ of certiorari.

In his brief and at oral argument Rotkiske attempted to advocate that his claim would be timely under “an equitable doctrine that delays the commencement of the statute of limitations in fraud actions” as first set forth in Bailey v. Glover, 21 Wall. 342 (1875).  The Supreme Court refused to entertain that argument as a result of Rotkiske’s failure to preserve it.  However, because the issues were not reached on the merits it does not appear that the Rotkiske decision forecloses the application of doctrines such as equitable tolling or fraudulent concealment to extend the statute of limitations in FDCPA cases. A concurrence by Justice Sotomayor and a dissent by Justice Ginsburg make it clear that they favor such exceptions to the statute of limitations.