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BizLitNews SCOTUS watch: Rotkiske v. Klemm and whether the “discovery rule” applies to FDCPA’s one-year limitations period.

We are keeping an eye on Rotkiske v. Klemm, which is currently pending at the U.S. Supreme Court. This case will likely resolve a circuit split on whether the “discovery rule” applies to toll the one-year statute of limitations under the Fair Debt Collection Practices Act (FDCPA). That limitations provision states that an FDCPA claim “may be brought . . . within one year from the date on which the violation occurs.” 15 U.S.C. § 1692k(d).

Klemm & Associates law firm sued Kevin Rotkiske to collect a small credit card debt. Rotkiske was not personally served, though someone at his former address accepted service. Klemm obtained a default judgment, Rotkiske being unaware of the suit. Some five years later, Rotkiske was denied a mortgage application because of the default judgment. This was the first time Rotkiske became aware of his potential FDCPA claim against Klemm. But his claim was well-beyond the FDCPA’s one-year limitations period. The question became whether the one-year period should begin to run from the time the claimant learns of the violation as opposed to the date of the violation itself. Rotkiske lost at the trial court and appealed.

The Third Circuit affirmed, holding that the discovery rule does not apply to toll the FDCPA’s one-year statute of limitations, meaning the period begins to run as soon as the violation occurs, even if the plaintiff does not learn about it until later.  Oppositely, the Fourth and Ninth Circuits have held the discovery rule applies to the FDCPA limitations period, meaning the one-year clock does not start until the plaintiff learns of the violation.

SCOTUS granted certiorari in February 2019 to resolve this circuit split. The case will likely be argued in the fall of 2019. We will report the outcome here.

Authored by: John H. Dollarhide