In Klemm, the Third Circuit affirmed a lower court’s finding that, under the FDCPA, 91 Stat. 874, 15 § U.S.C. 1692 et seq., the statute of limitations begins to run on the date on which the violation occurs.  The Court focused on the section of the FDCPA that states “[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.”  15 U.S.C. § 1692(k).  The Third Circuit noted that both the Fourth and Ninth Circuit, however, have held that the limitations period begins to run at the time the violation at issue is discovered, not when it occurs.  See Lembach v. Bierman, 528 F. App’x 297 (4^th Cir. 2013) (per curium); Mangum v. ActionCollection Serv., Inc. 575 F.3d 935 (9^th Cir. 2009).  However, the Third Circuit disagreed, taking the language of the statute at face value and finding that the statute of limitations runs on the of occurrence.

The relevant facts at issue were not disputed by the parties.  Plaintiff Kevin Rotkiske accumulated credit card debt between 2003 and 2005, which was referred by his bank to Defendant Klemm & Associates, et al. (“Klemm”) for collection.  Klemm sued for payment in 2008 and attempted service at an address at which plaintiff no longer resided.  Klemm withdrew its suit when it could not locate Rotkiske.  In January 2009, Klemm re-filed the action and attempted service at the same address.  Unbeknownst to Rotkiske, an individual at that address accepted service.  Klemm ultimately obtained a default judgement in the amount of approximately $1,500.  Rotkiske did not discover the judgment until he applied for a mortgage in September 2014.  In June 2015, Rotkiske sued Klemm and associated individuals and entities for violation of the FDCPA for their collection efforts.  Klemm moved to dismiss the FDCPA claim as untimely.  The U.S. District Court for the Eastern District of Pennsylvania granted Klemm’s motion and rejected Rotiske’s argument that the statute of limitations period under the FDCPA incorporated a “discovery rule which ‘delays the beginning of a limitations period until the plaintiff knew or should have known of his injury.’” 

The Court noted that in fixing a start date for a statute of limitations period, a legislature may choose an “occurrence rule” – commencing from the date that an injury actually occurred, or a “discovery rule” – delaying the limitations period until “the date the aggrieved party knew or should have known of the injury.”  Here, the Third Circuit determined that the occurrence rule clearly applied, holding that “1692(d)’s one-year limitations period begins to run when a would-be defendant violates the FDCPA, not when a potential plaintiff discovers or should have discovered the violation.”  In so doing, the Third Circuit declined to follow the Ninth Circuit and Fourth Circuit, both of which implied a discovery rule in the FDCPA’s statute of limitations. 

The Court concluded by “emphasizing that our holding today does nothing to undermine the doctrine of equitable tolling,” an issue that the Court did not reach because Rotkiske did not raise it on appeal.   Notably, the Court concluded the possibility of raising equitable tolling should not be foreclosed and that it remains available in cases that involve “fraudulent, misleading or self-concealing conduct.”