The U.S. Supreme Court has agreed to hear another FDCPA case to answer an important FDCPA question about how long a debtor has to file a suit for an alleged FDCPA violation. In Rotkiske v. Klemm, the Supreme Court will decide when the FDCPA one-year statute of limitations begins to run.
Occurrence rule or discovery rule
Specifically, the Supreme Court will decide whether the limitations period begins to run from the actual day on which an injury happened (the occurrence rule) or from the date on which the injured person knew of the injury or reasonably should have known (the discovery rule).
Rotkiske is a case from the U.S. Court of Appeals for the Third Circuit in which a consumer sued a debt collector and related entities for alleged violation of the FDCPA that he discovered well past the one-year statute of limitations. However, he filed suit within one year of discovery, which would be timely under the discovery rule, but untimely under the occurrence rule.
The FDCPA language at issue specifies that a suit under the statute must be brought in federal district court "within one year from the date on which the violation occurs." The Third Circuit Court said that the Act's language clearly describes Congressional intent to apply the occurrence rule -- so that the clock begins ticking on the actual date of debtor injury, even if not discovered until later.
The Third Circuit Court court went on to say that Congress does not have to explicitly reject the discovery rule when it so explicitly chooses the occurrence rule. "Statutory interpretation, as we always say, begins with the text." Clear language that says the statute of limitations begins to run on the date of injury implicitly rejects the discovery rule. The Third Circuit Court stated its view: ".. the Act says what it means and means what it says: the statute of limitations runs from "the date on which the violation occurs." 15 U.S.C. § 1692k(d)." Congress's explicit choice of an occurrence rule implicitly excludes a discovery rule. "Sometimes Congress clearly picks one model or another."
The Third Circuit rejected Rotkiske's request to follow opposite holdings in the Ninth Circuit (Mangum v. Action Collection Serv., Inc., 575 F.3d 935 (9th Cir. 2009)) and Fourth Circuits, which said that the discovery rule applies to the FDCPA statute of limitations. The Rotkiske court firmly relied on the plain language of the statute: "date on which the violation occurs." The Rotkiske Court pointed out that neither the Ninth Circuit nor the Fourth Circuit analyzed the "violation occurs" language of the FDCPA. Instead the Fourth Circuit and Ninth Circuit chose the discovery rule to vindicate the policies underlying the FDCPA without considering the availability of equitable tolling as a remedy where the plain language of the statute clearly incorporates the occurrence rule.
The Third Circuit Court did say that its opinion does not impact the "doctrine of equitable tolling," a concept that allows suspension of the running of the limitations period in extreme cases involving "fraudulent, misleading, or self-concealing conduct." The Third Circuit Court explained that the running of the limitations period might be suspended in a case of these "extraordinary barrier[s]" to discovering that an injury has occurred. "We do not reach the question in this case only because Rotkiske failed to raise it on appeal. Accordingly, our opinion should not be read to foreclose the possibility that equitable tolling might apply to FDCPA violations that involve fraudulent, misleading, or self-concealing conduct."
We will keep our readers informed about Rotkiske, which will be argued this fall to resolve the split between Third Circuit and the opposite holdings in the Fourth Circuit and Ninth Circuit.