February 25, 2020

Rotkiske v. Klemm


Does the Discovery Rule Apply to the One-Year Statute of Limitations under the Fair Debt Collection Practices Act, 15 U.S.C. § 1692, Et Seq.?


The Fair Debt Collection Practices Act (FDCPA), enacted in 1977, prohibits abusive debt collection practices and sanctions permissible ones. It allows for civil suits for violations, including actual damages, statutory damages, and attorney’s fees. The statute, 15 U.S.C. § 1692k(d), states that FDCPA actions must be filed within one year from the date on which the violation occurs. This FDCPA suit was started in June 2015, four years after the last collection attempt. It was dismissed as untimely by the district court, which was affirmed by the Third Circuit, creating a split among jurisdictions.

Docket No. 18-328
Argument Date: October 16, 2019
From: The Third Circuit
by Barbara L. Jones
Minnesota Lawyer, Minneapolis, MN


Does the “discovery rule” apply to the one-year statute of limitations under the Fair Debt Collection Practices Act, 15 U.S.C. § 1692, et seq.?


Petitioner Kevin Rotkiske incurred about $1,200 in credit card debt between 2003 and 2005. In March 2008, the respondents Klemm & Associates and Paul Klemm attempted to sue the petitioner, but the suit was withdrawn because service was ineffective. In 2009, the respondents again attempted to serve the petitioner at the same address. According to the respondents, Klemm changed firms and not all the file data merged, due to software incompatibility. An affidavit of service was filed. The petitioner claimed the affidavit falsely stated that a suitable adult had been served. Later that year, a default judgment was entered against the petitioner. The petitioner said he was not aware of the lawsuit or the judgment until he attempted to get a mortgage in 2014. Within a year of “discovery,” the petitioner sued respondents under the FDCPA alleging ineffective or fraudulent service. The district court dismissed the suit as untimely because it was outside of the FDCPA’s one-year statute of limitations. A Third Circuit panel heard the case but before an opinion was issued, the court sua sponte ordered an en banc hearing. It then affirmed the dismissal, saying the statute began to run at the time of the violation, not when it was discovered. The Third Circuit is at odds with the Fourth and Ninth Circuits, which follow the discovery rule.


Application of the discovery rule would benefit a claimant such as the petitioner by delaying or suspending the running of the statute of limitations until the claimant knew or should have known of the violation of the statute. The petitioner points out that the FDCPA proscribes a wide range of violations that may occur without immediate awareness by the debtor. He states that he is a “quintessential blamelessly ignorant” plaintiff, the “victim” of a fraudulent affidavit of service. He points out that the willful failure to properly serve a complaint but nevertheless file proof of service is common enough to have its own name in the debt collection industry—”sewer service.”

According to the petitioner, the fundamental question before the Court is whether an equitable doctrine, i.e. the discovery rule, may be included in the statute or whether the text forecloses that possibility.

Equitable tolling, where a court ameliorates the impact of a statute of limitations, is a similar but not identical remedy. The Third Circuit said, in apparent contrast to its holding, that the court may permit equitable tolling but not in this case because it was not raised on appeal.

The parties appear to agree that the statute of limitations is not a statute of repose. A statute of repose is a harder end date that generally benefits defendants and would preclude an equitable remedy.

But the law does not clearly state that an FDCPA claim is time-barred after a year from discovery, petitioner says. “The answer to that question lies elsewhere—in the common law reflected in, and developed by, this Court’s decisions, and in the remainder of the FDCPA itself, whose purpose and structure strongly suggest the discovery rule applies,” the petitioner asserts.

The case thus explores the application of common law principles to statutes. The petitioner asserts that the caselaw preceding the FDCPA would have led Congress to conclude that a suit like the petitioner’s, brought within a year of discovery, would not be dismissed as untimely. Nothing in the statute indicates the caselaw does not apply, as would be expected if that was Congress’s intent, the petitioner argues.

Petitioner goes back to the 1874 case of Bailey v. Glover, 88 U.S. 342, a bankruptcy case that said a fraud prevented the statute of limitations from running. The Court upheld Bailey in 1918 and again in 1946 in Holmberg v. Armbrecht, 327 U.S. 392. In the latter case, the Court said that the equitable doctrine is read into every federal statute of limitation (emphasis by petitioner).

More cases followed, culminating with American Pipe & Construction Co. v. Utah, 414 U.S. 538 (1974). In that case, the Court said, “the mere fact that a federal statute providing for substantive liability also sets a time limitation upon the institution of suit does not restrict the power of the federal courts to hold that the statute of limitations is tolled under certain circumstances not inconsistent with the legislative purpose.”

The petitioner then turns to the purposes and structure of the FDCPA to suggest that the discovery rule applies. Here he reminds the Court that abuse and deceit are what led Congress to regulate debt collection in the first place.

One of the techniques that Congress employed is private civil lawsuits, the petitioner continues. It also structured the law to include a remedy in numerous situations where the victim is unaware of the violation at the time, he argues (which contradicts the Third Circuit’s assumption that victims will generally be aware of FDCPA violations). “The existence of victims ‘blamelessly ignorant’ of FDCPA violations giving rise to liability is a logical consequence of the statute’s provisions—not an anomaly,” he states. The scheme set up by Congress would be impaired by effectively immunizing “broad swaths of misconduct,” hurting consumers and undermining the legislative goal of putting creditors and debtors on a level ground.

In conclusion, the petitioner points out that the purpose of most statutes of limitations is to protect defendants against stale claims, but that purpose is not served in the case of a blamelessly ignorant plaintiff.

The respondents are adamant that the plain text of the law is unambiguous and means that the statute of limitations begins to run when the violation occurs, and that Supreme Court caselaw confirms that. “When the violation occurs” means when the violation occurs, and not a different date depending on an extra-textual reading. The Supreme Court should resolve this case under standard tools of statutory interpretation, respondents assert.

The respondents first turn to TRW Inc. v. Andrews, 434 U.S. 19 (2001), where the Court said that the words “from the date on which the liability arises” did not incorporate the discovery rule. Congress knows how to incorporate such a rule, the respondents noted.

And in Gabelli v. SEC, 568 U.S. 442 (2013), the language “from the date when the claims first accrued” foreclosed the discovery rule, respondents continue. That was the result even when fraud was involved.

If the plain meaning of the statutory language is insufficient to settle the matter, the respondents continue, its reading of the law also advances the purposes of limitations periods and of the FDCPA. That includes repose, elimination of stale claims, and certainty about a plaintiff’s potential recovery.

That’s because the FDCPA is not only about bad actors, it is about ensuring that responsible debt collectors do not face unfair competition, respondents assert. “It is no secret that the FDCPA created incentives for lawyers to file a high volume of flimsy FDCPA suits to win a few quick settlements. Reading the discovery rule into the statute would only exacerbate this problem and increase the costs of defense,” respondents warn.

The respondents appear to want to end the discussion there, saying the petitioner’s contrary arguments are unavailing. They claim that the petitioner ignores the text while promoting a common-law default presumption in favor of discovery. There is no such wide-ranging presumption and if there were, the unambiguous statute would override it, respondents continue. Congress has recognized such a presumption only when the law “cries out for application of the discovery rule,” such as in fraud cases, respondents assert. In other cases, the “standard” rule was established in Bay Area Laundry and Dry Cleaning Pension Trust Fund v. Ferbar Corp. of Cal., 522 U.S. 192 (1997). There, the Court held the limitations period commences when the plaintiff has a complete and present cause of action. Bay Area Laundry has since been restated at least five times, respondents argue.

Respondents tersely continue that “debt collection hardly fits that bill” and that violations of the statute will be obvious, which some might question. Of course, the petitioner claims that the false affidavit of service makes this a fraud case, as he points out in his reply brief. The case is before the Court on a motion to dismiss, which means that petitioner’s allegations should be accepted as true.

Respondents continue by asserting that the remainder of the petitioner’s argument is really about equitable tolling, which turns on specific facts. Not only is the application of equitable tolling unlikely, it is not the question litigated below or on which the petitioner sought certiorari, which are important procedural considerations, the respondents argue. Respondents note that the district court did not apply equitable tolling and the petitioner did not challenge it. Petitioner submits that the respondents have conceded that equitable principles may apply to a FDCPA claim since they argued that the petition for certiorari should be denied because equitable tolling was available to the petitioner.


Statutes of limitations and tolling periods are generally productive fodder for litigation. This case likely will resolve a split in the circuits and thereby decide whether there is a common law  discovery rule under this statute, which will supply obviously needed clarification.

As would be expected, amici have weighed in on both sides, with the United States supporting the respondents and having the opportunity to argue before the Court. The solicitor general argues that there is no “discovery rule presumption” and if there was, it would be superseded by the statute. This approach would relieve the courts of having to decide when a plaintiff discovered, or should have discovered, a violation of the statute. Equitable tolling might save the petitioner’s case, if he had not forfeited the argument in proceedings below, the solicitor general argues. The Court could decide the case without any ruling on equitable tolling.

Other amici aligned with creditors to urge the Court to keep the one-year statute on pain of a tsunami of litigation over an extra-textual reading of the statute, pointing out that there is no statute of repose in the FDCPA. Similarly, some lawyers say the case is important to class action practice “because the FDCPA is one of those many ‘gotcha’ statutes that offer classwide statutory damages for technical violations, and a discovery rule could reopen endless events of the past to fresh litigation today.” https://www.jdsupra.com/legalnews/time-stops-for-no-one-the-supreme-court-87899/

But other amici, including the National Consumer Law Center, urge the Court not to automatically foreclose claims after one year. Debt collection is often accompanied by deception and abuse, it argues, and this impacts low-income persons, the elderly, and persons of color particularly disproportionally. It presents the Court with many examples of situations where statutory violations were not discovered within a year, including some based on bad service of process.

A group of law professors urge the Court to consider the origin of the discovery rule, which is in fraud cases. While they disagree that equitable tolling applies, they argue that “because Congress legislates against this background, statutes that neither expressly include nor expressly preclude a discovery rule are best read to include a discovery rule in cases of alleged fraud,” including this one.

Barbara L. Jones is an attorney and editor of Minnesota Lawyer newspaper. She can be reached at barbarajones14@comcast.net or 651.587.7803.

PREVIEW of United States Supreme Court Cases 47, no. 1 (October 7, 2019): 36–38. © 2019 American Bar Association


  • Attorneys for Petitioner Kevin C. Rotkiske (Scott E. Gant, 202.237.2727)
  • Attorneys for Respondents Paul Klemm, et al. (Shay Dvoretzky, 202.879.3939)


In Support of Petitioner Kevin C. Rotkiske

  • National Consumer Law Center (Stuart Todd Rossman, 617.542.8010)

In Support of Respondents Paul Klemm, et al.

  • ACA International (Megan Starace Ben’Ary, 703.647.5933)
  • Mortgage Bankers Association and the Chamber of Commerce of the United States of America (Elaine Janet Goldenberg, 202.220.1114)
  • National Creditors Bar Association (Misha Tseytlin, 312.759.5947)
  • Receivables Management Association International, Inc. (Donald S. Maurice Jr., 908.237.4570)
  • United States (Noel J. Francisco, Solicitor General, 202.514.2217)

In Support of Neither Party

  • Samuel L. Bray, David Marcus, and Stephen C. Yeazell (Stuart Banner, 310.206.8506)