June 2, 2020

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June 01, 2020

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DOJ Files Amicus Brief With SCOTUS in FDCPA Statute of Limitations Case

The DOJ has filed an amicus brief in support of the defendant debt collector in Rotkiske v. Klemm, the case before the U.S. Supreme Court that hopefully will resolve a circuit court split over whether the Fair Debt Collection Practices Act (FDCPA) one-year statute of limitations (SOL) runs from the date of the alleged violation or starts upon a consumer’s discovery of the violation.  The brief lists Consumer Financial Protection Bureau (CFPB) attorneys and Department of Justice (DOJ) attorneys (including the Solicitor General).

The FDCPA provides that “[a]n action to enforce any liability created by this subchapter may be brought in any appropriate United States District Court…within one year from the date on which the violation occurs.” In Rotkiske, the plaintiff alleged that the defendant violated the FDCPA by obtaining a default judgment against him based on service of a complaint at an address the defendant knew or should have known was incorrect.

An en banc U.S. Court of Appeals for the Third Circuit rejected the plaintiff’s argument that the FDCPA’s one-year SOL did not begin to run until he discovered the default judgment upon applying for a mortgage loan approximately five years after service of the complaint.  Instead, based on the statutory text, the Third Circuit held that the SOL runs from the date of the violation.  Unlike the Third Circuit, the Fourth and Ninth Circuits have held that the discovery rule does apply to the FDCPA’s one-year SOL.

The DOJ makes the following primary arguments in support of its position that the FDCPA SOL runs from the date of the alleged violation:

  • The FDCPA’s plain text unambiguously makes the occurrence of an alleged violation the SOL’s starting point.

  • SCOTUS has never adopted a general presumption that federal SOLs should be read to incorporate a discovery rule and even if such a presumption existed, it would be overcome by the FDCPA’s plain text.

  • While equitable principles may sometimes warrant excusing a plaintiff’s failure to satisfy an SOL or preclude a defendant from asserting untimeliness as a defense, the plaintiff abandoned that argument on appeal and there is no basis to overturn the Third Circuit’s en banc decision based on equitable tolling.  (The plaintiff had alleged that the defendant purposefully ensured that he could not properly be served and filed a false affidavit of service attesting that he had been properly served.  The DOJ concedes that these allegations, if true, might warrant application of equitable tolling.  It states that if SCOTUS were to conclude that consideration of equitable tolling is essential to proper analysis of the question presented, it should dismiss the writ of certiorari as improvidently granted.)

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About this Author

Culhane, Ballard, Partner

John L. Culhane, Jr., is known for his work advising on interstate direct and indirect consumer and residential mortgage loan and leasing programs, through both traditional brick-and-mortar facilities and e-commerce. Before joining Ballard Spahr, Mr. Culhane was associate counsel with Mellon Bank, N.A.; associate counsel with Bank of America NT&SA; and senior attorney (section chief) with the National Credit Union Administration, the federal agency regulating federal credit unions.

Mr. Culhane addresses issues involving licensing,...