Collector - February 2020 - 40

CASELAW

Legal Liability
& the FDCPA
When does the clock start to run
on the statute of limitations? A U.S.
Supreme Court case brings muchneeded clarity for debt collectors.
By Will Esser

D

ebt buyers and others in the debt
collection industry have been stuck
with uncertainty on a key question:
how long do they face legal liability after a
violation of the Fair Debt Collection Practices
Act? Federal appeals courts for mid-Atlantic
and West Coast states have extended the
clock for plaintiffs to bring lawsuits over
FDCPA violations, while the federal appeals
court for Pennsylvania, New Jersey and
Delaware reached the opposite conclusion.
The U.S. Supreme Court resolved that
issue on Dec. 10, 2019, in Rotkiske v. Klemm.
In that decision, the nation's highest court
granted a significant-but not a total-
victory to debt collectors.

BACKGROUND ON THE CASE
The FDCPA sets broad parameters for what
debt collectors can and can't do, and there is
a long history of plaintiffs filing lawsuits for
the most technical of violations. Fortunately,
claims under the FDCPA are also subject to a
one-year statute of limitations, which means
that any claim has to be brought within
one year. The whole purpose of a statute of
limitations is to give parties who may have
committed a violation a definite end date
when they are going to be off the hook for
such violation.
The question at the heart of Rotkiske v.
Klemm was when does the clock start to run
on the statute of limitations? The statute on its
face says that the one-year period runs "from
the date on which the violation occurs." While
that seems straightforward enough, some
courts have extended the clock through a
concept called the discovery rule. That concept
holds that the statute of limitations will not

40

start to run until somebody has actually
discovered the violation.
The most typical area where the discovery
rule is employed is in the area of fraud, where
somebody likely wouldn't know about the
violation until some time after it occurred.
For debt collectors who want certainty, the
discovery rule is problematic-it means they
could be sued at any time for something that
happened eons ago.
In 2015, Klemm & Associates was sued
by Kevin Rotkiske over an alleged FDCPA
violation that happened six years earlier in
connection with the attempted collection of
a credit card debt. A federal district court
in Pennsylvania dismissed Rotkiske's claim,
pointing out that it was time-barred since
the violation happened more than one year
before the lawsuit was filed. The U.S. Court
of Appeals for the 3rd Circuit agreed, finding
"that this language spoke clearly."
But two other federal appeals courts-the
4th and 9th Circuits-reached the opposite
conclusion in earlier cases. They found that
the discovery rule does in fact apply to claims

under the FDCPA and allowed years-old
claims to proceed. Rotkiske argued that those
courts got it right and all federal statutes
should be interpreted to include a discovery
rule, regardless of what the actual language
of the statute says. To resolve the split, the
nation's highest court agreed to hear the 3rd
Circuit case.

U.S. SUPREME COURT RULING
The Supreme Court sided with the 3rd
Circuit in an 8-1 decision and held that
Congress was clear in how it wrote the
law: the statute of limitations starts when
the violation occurs, rather than when it
is discovered. As Justice Clarence Thomas
wrote for the court: "It is not our role to
second-guess Congress' decision to include
a 'violation occurs' provision, rather than a
discovery provision ... We simply enforce the
value judgments made by Congress."
As for lower court cases, which had
inferred a discovery rule in every federal
statute, the Supreme Court rejected them
dismissively, noting, "This expansive

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Collector - February 2020

Table of Contents for the Digital Edition of Collector - February 2020

Presidents Page
Industry News
Best Practices
FYI
Collection Tips
Overlapping Responsibilities?
Taking on Tax Time
Making Connections in D.C.
Calendar
Honor Roll
Education Spotlight
Creative Solutions
Ask the Experts: Reaching Out
Legal Liability & the FDCPA
Advocacy and Parenthood: Not So Different
Your Opinion Matters
Beyond the Boundary of the Law
ACA SearchPoint
Membership
Ad Index
Last Word
Collector - February 2020 - Cover1
Collector - February 2020 - Cover2
Collector - February 2020 - 1
Collector - February 2020 - 2
Collector - February 2020 - 3
Collector - February 2020 - 4
Collector - February 2020 - Presidents Page
Collector - February 2020 - Industry News
Collector - February 2020 - 7
Collector - February 2020 - 8
Collector - February 2020 - 9
Collector - February 2020 - 10
Collector - February 2020 - 11
Collector - February 2020 - Best Practices
Collector - February 2020 - 13
Collector - February 2020 - FYI
Collector - February 2020 - 15
Collector - February 2020 - Collection Tips
Collector - February 2020 - 17
Collector - February 2020 - Overlapping Responsibilities?
Collector - February 2020 - 19
Collector - February 2020 - 20
Collector - February 2020 - 21
Collector - February 2020 - Taking on Tax Time
Collector - February 2020 - 23
Collector - February 2020 - 24
Collector - February 2020 - 25
Collector - February 2020 - Making Connections in D.C.
Collector - February 2020 - 27
Collector - February 2020 - 28
Collector - February 2020 - 29
Collector - February 2020 - 30
Collector - February 2020 - 31
Collector - February 2020 - Calendar
Collector - February 2020 - Honor Roll
Collector - February 2020 - Education Spotlight
Collector - February 2020 - 35
Collector - February 2020 - Creative Solutions
Collector - February 2020 - 37
Collector - February 2020 - Ask the Experts: Reaching Out
Collector - February 2020 - 39
Collector - February 2020 - Legal Liability & the FDCPA
Collector - February 2020 - 41
Collector - February 2020 - Advocacy and Parenthood: Not So Different
Collector - February 2020 - 43
Collector - February 2020 - Your Opinion Matters
Collector - February 2020 - 45
Collector - February 2020 - Beyond the Boundary of the Law
Collector - February 2020 - 47
Collector - February 2020 - ACA SearchPoint
Collector - February 2020 - 49
Collector - February 2020 - Membership
Collector - February 2020 - Ad Index
Collector - February 2020 - Last Word
Collector - February 2020 - Cover3
Collector - February 2020 - Cover4
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