The Fair Debt Collection Practices Act (FDCPA) (15 U.S.C. § 1692 and following) protects consumers from debt collector harassment. Under this federal law, collectors are prohibited from, among other things, contacting debtors at unusual or inconvenient times or places, threatening them with physical harm, repeatedly calling with the intent to annoy or harass, and using obscene language.
If a collector violates the FDCPA, you can take action to stop that collector, like by reporting it to a government agency (such as the Consumer Financial Protection Bureau) or filing a lawsuit against the collector. (15 U.S.C. § 1692k(a)). If you sue the collector and win, you might be entitled to recover monetary damages, attorneys' fees, and more. But you have a limited amount of time to file your suit
As the Supreme Court confirmed in the case of Rotkiske v. Klemm, 140 S.Ct. 355 (2019), discussed below, absent the application of an equitable doctrine, lawsuits arising under the FDCPA must be brought “within one year from the date on which the violation occurs.” (15 U.S.C. § 1692k(d)).
In the Rotkiske case, the U.S. Supreme Court held that the “discovery rule” (see below) doesn’t pause or “toll” the statute of limitations under the FDCPA. Instead, the Court's decision was that the one-year statute of limitations for an FDCPA violation begins to run when the alleged infringement occurs, not when the offense is discovered, unless an equitable doctrine applies.
With this decision, the Supreme Court resolved a split among the circuits about whether a blanket discovery rule applies to the FDCPA, and it also limited debt collector liability under that law.
This particular case began when Kevin Rotkiske (the consumer) brought FDCPA claims against Klemm & Associates (the collector) relating to a default judgment that the collector obtained against Rotkiske for approximately $1,200 in unpaid credit card debt.
Here's what happened: In both a 2008 suit that it dropped and an eventual 2009 suit, the collector attempted to serve Rotkiske at an address where he no longer lived. An individual who didn’t match Rotkiske's description accepted service. Rotkiske, of course, didn’t respond to the suit because he didn't know about it, and the collector obtained a default judgment (an automatic win) against him.
Rotkiske found out about the collector's judgment against him in 2014 when he was turned down for a home loan. Rotkiske then filed suit against the collector in 2015, alleging that the collector deliberately made sure that he didn’t receive service so that it could get a default judgment against him in violation of the FDCPA. Rotkiske's filed his suit more than a year after the violation supposedly occurred, so he argued that the court should apply a “discovery rule” to delay the beginning of the limitations period until the date he knew or should have known of the alleged FDCPA violation.
In some instances, the discovery rule modifies a statute of limitations so that it doesn’t start running until the victim discovers that a legal violation has occurred. This rule protects plaintiffs from a claim dismissal based on the expiration of a statute of limitations if they were unaware that a violation happened.
The district court rejected Rotkiske’s argument and said that the plain language of the FDCPA requires the limitations period to start from the date of the violation, whether the offense is discovered or not. The Court of Appeals for Third Circuit affirmed and found that the “occurrence rule,” which says the statute of limitations begins at the time the alleged wrongdoing happens, applies to these kinds of claims. The Third Circuit decided the case as if the consumer made the argument that the discovery rule should apply to all FDCPA cases, not just this one.
The courts were split on this issue, with the Third Circuit determining that the discovery rule doesn’t apply in FDCPA cases, and the Fourth and Ninth Circuits saying that it does. The U.S. Supreme Court agreed to take the case to consider whether the discovery rule should, as a blanket rule, toll the one-year statute of limitations under the FDCPA.
In an 8-1 decision, the Supreme Court held that the one-year statute of limitations for an FDCPA violation begins to run when the alleged offense occurs—not when it’s discovered. The Court said that the language of 15 U.S.C. § 1692k(d) is unambiguous: the limitations clock starts on the date when the alleged violation actually happened. The Court refused to state that a blanket discovery rule exists when Congress didn’t expressly provide for one in the FDCPA.
The Court did not, however, discuss whether the FDCPA permits the application of equitable tolling doctrines in this case because Rotkiske failed to preserve this argument in the lower court and failed to raise it in his petition asking the Supreme Court to review the case.
Equitable tolling pauses the clock on a limitations period if the plaintiff, despite reasonable efforts, didn’t discover the violation within the statutory time limit. Basically, this doctrine allows equitable (fair) exceptions to a statute of limitations on a case-by-case basis. So, even though a general discovery rule isn’t available for all FDCPA cases, equitable tolling could be argued in extraordinary situations.
The Court’s ruling also doesn’t address whether consumers might be able to bring claims outside the statute of limitations, alleging a more specific fraud-based discovery rule. (Justice Sotomayor issued a concurring opinion, which noted that the Court’s decision doesn’t bar claims based on fraud or concealment.) Instead, the Court's ruling was limited to whether the discovery rule generally applies to the FDCPA’s statute of limitations period—and the Court held that it doesn’t.
If the Supreme Court had decided that the discovery rule applied to the FDCPA, it might have opened the door to more consumers to file suit under the statute. So, in this way, the decision limited debt collector liability under the FDCPA.
If you think a debt collector has violated the FDCPA when trying to collect a debt from you and you want to sue that collector, consider talking to an attorney to get advice about your options and the deadline for starting your suit. Also, be aware that if you can't bring an action under the FDCPA due to limitations issues, you might get a longer limitations period for claims under state law.