Supreme Court rules debt collection lawsuit statute of limitations starts when violation occurs
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Supreme Court rules debt collection lawsuit statute of limitations starts when violation occurs

The US Supreme Court ruled 8-1 Tuesday that the one-year filing deadline for a Fair Debt Collection Practices Act (FDCPA) lawsuit is determined from when the alleged violation occurs, not when it is discovered.

The petitioner in this case, Kevin Rotkiske, was originally sued by debt collectors who received a default judgment after Rotkiske failed to respond. Rotkiske was unaware of the suit against him until applying for a mortgage, as all notices were sent to a previous mailing address. Rotkiske then filed suit against the debt collectors under the FDCPA.

The FDCPA permits private civil actions against debt collectors who engage in certain prohibited practices. According to the statute, an FDCPA action must be brought “within one year from the date on which the violation occurs.”

Rotkiske claimed that the debt collectors violated the FDCPA by contacting him without lawful ability to collect. The debt collectors initially sought to dismiss the case as the one-year statute of limitations for an FDCPA suit had passed. In response, Rotkiske argued that the “one year” deadline should begin from the date that he knew or should have known of the alleged FDCPA violation. This is known as the “discovery rule.”

In reviewing the case, the Supreme Court upheld the US Court of Appeals for the Third Circuit’s ruling, which held that Rotkiske brought his FDCPA claim too late. Applying a strict textualist reading to the statute, Justice Clarence Thomas wrote that the FDCPA clearly imposes a one-year limit on filings from the date on which the violation occurs, not when it is unearthed. Thomas further noted that it is Congress who decides the limitations, and that the court has no role in “second guessing” Congressional intent.

Thomas also addressed the use of the “discovery rule” in instances of fraud, referred to as the “fraud-based discovery rule.” In the opinion, the court determined while the fraud-based discovery rule may be applicable, Rotkiske failed to preserve this issue before the Third Circuit nor raised it in his petition for certiorari.

In her dissent, Justice Ruth Bader Ginsburg agreed with general reading that the discovery rule does not apply to FDCPA’s one-year statute of limitations. However, she argued that Rotkiske could raise (and in fact did raise) the fraud-based discovery rule. Overall, Ginsburg advocated that Rotkiske’s claims fall within the scope of the fraud-based discovery rule and the court’s reading of it is too narrow. Due to the intent behind the fraud-based discovery rule, the rule should govern if “either the conduct giving rise to the claim is fraudulent, or if fraud infects the manner in which the claim is presented.”