Consumer Finance Insights
June 18, 2019

“Blameless Ignorance” Should Not Prohibit Application of Discovery Rule in FDCPA Case, Petitioner Argues

On May 13, 2019, petitioner Kevin Rotkiske submitted his brief to the United States Supreme Court in Rotkiske v. Klemm, No 18-328.  As noted in a previous post, the Court accepted Rotkiske’s appeal back in February to resolve a circuit split between the Third Circuit and the Ninth and Fourth Circuits on the appropriate calculation of the statute of limitations in the Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. §§ 1692, et seq.  The brief’s submission brings the Court one step closer to resolving “[w]hether the ‘discovery rule’ applies to the one-year statute of limitations under the [FDCPA].”

The appeal stems from the Third Circuit’s decision holding that petitioner’s FDCPA claim could not proceed because he filed his case over six years after his alleged injury occurred.  Rotkiske amassed credit card debt during the early 2000s, which the company attempted to collect by referring the debt to a third-party debt collector, respondent Klemm & Associates (Klemm).  Klemm initiated a lawsuit in an attempt to collect the underlying debt, but failed to properly serve Rotkiske.  Klemm eventually obtained a default judgment in 2009.  Rotkiske maintains that he did not discover the judgment until 2014, when he was denied a home loan.  Rotkiske filed his FDCPA lawsuit in 2015.

The Third Circuit affirmed the district court’s dismissal of Rotkiske’s claims as untimely, holding that the FDCPA’s statute of limitations begins to run from the date of the injury and not from the date the plaintiff discovers that injury.  The court specifically declined to “imply a discovery rule” that was not contained within the express language of the statute, and instead reasoned that the language of the FDCPA’s statute of limitations provision “spoke clearly” in that the “period begins to run when a would-be defendant violates the FDCPA, not when a potential plaintiff discovers or should have discovered the violation.”

Rotkiske’s brief sheds light on the arguments that the Supreme Court will ultimately address.  Portraying himself as a “blamelessly ignorant,” Rotkiske argues that Klemm engaged in “deceptive, misleading or fraudulent conduct” contributing to this ignorance.  According to Rotkiske, failure to apply the discovery rule would create the ““odd’ interpretative result” of plaintiffs “los[ing] the right to sue even before learning of violations” because of fraudulent and misleading practices that the FDCPA was designed to avoid.

Rotkiske also relies upon the principle that Congress is presumed to enact legislation “having in mind the common law.”  Noting that the FDCPA is silent as to the application of the discovery rule, Rotkiske points to a litany of cases “that form the backdrop against which” Congress enacted the statute.  Each case generally held that “blameless ignorance” of an injury resulting from fraud or misconduct on the part of the defendant tolls the limitations period.  According to Rotkiske, these cases make it “difficult to imagine that Congress would have expected anything other than judicial application of the discovery rule to the FDCPA.”

Klemm’s brief due on July 12, 2019, and as such, it remains to be seen how respondent will reply to Rotkiske’s arguments.  What is clear, however, is that the case could shape FDCPA litigation for years to come in defining the time period in which plaintiffs may permissibly bring FDCPA claims.  We will continue to update our readers regarding the arguments made in the case and any other developments that may arise.