By Eric Lockridge and Katie Hollowell

The Supreme Court of the United States recently handed down a decision on the statute of limitations period under the Fair Debt Collection Practices Act (the “FDCPA”) to start off its term. The case provides a lesson to practitioners to draft carefully; the failure to do so may result in the loss of the cause of action.

The FDCPA is a federal statue that authorizes both private actions and public actions for violations of its provisions.[1] The applicable statute for the limitations period for private actions is 15 U.S.C. § 1692k(d), which states that any action must be brought “within one year from the date on which the violation occurs.”

In Rotkiske v. Klemm,[2] the Supreme Court expressly rejected application of the “discovery rule” to toll the running of one-year limitations period established by statute.  This decision resolved a circuit split between the Third Circuit (where Rotkiske originated and which rejected the discovery rule) and the Ninth Circuit (which endorsed the discovery rule) over the start of the limitations period. The Court upheld the Third Circuit’s decision, finding the language of § 1692k(d) is clear and unambiguous. Using traditional rules of statutory construction, the Court found the unambiguous language of the statute merited no further interpretation; to do so would be unnecessary and inappropriate.

Rotkiske presented a good equitable argument in favor of applying the discovery rule: he alleged he did not discover the basis of his FDCPA claim – faulty service leading to a default judgment against him – until more than one year after the (allegedly) faulty servicing occurred.

The Court rejected Rotkiske’s argument. Quoting Justice Scalia, the Court called the expansive approach to the discovery rule a “bad wine of recent vintage,” and found Congress made a conscious decision not to include a discovery rule in the FDCPA private cause of action provision. The Court narrowed the scope of its decision, however, stating that an equitable, fraud-specific rule may be applicable in a future case, if properly preserved and presented.

This caveat was necessary because Rotkiske argued an equitable, fraud-specific rule tolled the limitations period for his action. Nevertheless, the Court refused to consider the argument because it was not properly raised on appeal to the Third Circuit. So the Court preserved for a future date whether § 1692k(d) permits the applicable of an equitable doctrine to toll the statute of limitations.[3]

While a narrowly tailored decision, Rotkiske serves as a cautionary tale for practitioners: draft carefully. Failure to specifically allege and preserve claims could lead to dismissal, particularly in the context of the statute of limitations issues.

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[1] 15 U.S.C. §§ 1692k(d); 1692l.

[2] 589 U.S. ____ (2019).

[3] Justice Ginsberg alone dissented, stating that the fraud alleged in Rotkiske’s petition was sufficient to present the fraud-based discovery rule for review on appeal.