Cases & Deals

Paul Klemm obtains Supreme Court victory in statute-of-limitations case with wide-ranging implications

Client(s) Klemm, Paul J.

Jones Day represented the Respondent, Paul Klemm, in his recent Supreme Court victory. The case involved the FDCPA, which provides consumers a remedy for abusive debt-collection practices. The FDCPA's statute of limitations says that suits must be filed within one year of "the date on which the violation occurs." 15 U.S.C. § 1692k(d). Despite that clear statutory text, some courts had interpreted that limitations period to begin running only once the violation is (or reasonably should be) discovered. The Supreme Court granted certiorari to decide whether the FDCPA's statute of limitations means what it says—or whether it implicitly incorporates the so-called "discovery rule."

All nine Justices agreed that the FDCPA's limitations period ordinarily starts, as the statute provides, when the "violation occurs." See Slip Op. 1, 5 (majority op.); Slip Op. 1 (Ginsburg, J., dissenting). It held, in other words, that the FDCPA cannot be interpreted to incorporate an across-the-board discovery rule.

The Court declined to decide whether certain equitable doctrines can delay commencement of the FDCPA's limitations period in individual cases, like those involving fraud. Slip Op. 6–7 & n.3. The Petitioner "failed to preserve this issue before the Third Circuit" or "in his petition for certiorari." Id. at 7 & n.3. Justice Ginsburg dissented on that point; she would have held that equitable tolling for cases of fraud is available under the FDCPA and would have allowed the plaintiff to try to prove fraud in this case.

The Court's ruling that the FDCPA does not incorporate an across-the-board discovery rule resolved a circuit split, bringing much needed clarity to the debt-collection industry. It will also provide an important check on a cottage industry of coercive FDCPA litigation, ensuring that, in the mine-run of cases, the limitations clock will predictably expire one year after the disputed conduct.

This case has broader implications, too. In a 2001 case, the Supreme Court punted on the question whether statutes of limitation should be interpreted in light of a background presumption in favor of a "general discovery rule." TRW Inc. v. Andrews, 534 U.S. 19, 27 (2001). Nearly two decades later, the Court has finally given its answer, quoting Justice Scalia's concurrence in TRW: That "expansive approach to the discovery rule," the Court explained, is "bad wine of recent vintage." Slip Op. 5 (internal quotation marks omitted). Instead, where a statute of limitations is ambiguous, courts must assume that Congress intended to adopt the "standard rule that the limitations period commences when the plaintiff has a complete and present cause of action." Id. at 4 (internal quotation marks omitted).

This new interpretive principle has implications for all statutes of limitations with "two plausible constructions." Id. (internal quotation marks omitted). Now, the right to bring suit under such laws should turn not on the happenstance of a plaintiff's discovery, but on the timing of the conduct actually at issue. That result will provide certainty and stability to businesses and individuals across a wide range of industries.

Rotkiske v. Klemm, No. 18-328 (U.S.)