On December 10, 2019 the US Supreme Court released its first opinion in an argued case for the current term, in Rotkiske v. Klemm. The case stems from an attempt by the Respondent, a debt collector by the name of Klemm (and several companies he is or was previously associated with) to collect a relatively small credit card debt from the Petitioner, Mr. Rotkiske, that was overdue. The Respondent brought suit twice - once in early 2008 and again in January 2009. In both cases, service of process was attempted at an address where the Petitioner no longer lived. The people who lived at the address accepted service of process - it is unclear whether the person or persons who accepted service were the same in each case, or whether they had any idea who the Petitioner was. The first suit was withdrawn but the second suit made it to court, and since the Petitioner had never received process he was a no-show at the trial.
A default judgment was entered against the Petitioner at trial (again, since he was a no-show). It would not be until 2015, when applying for a mortgage, that the Petitioner would discover the default judgment against him. He then brought suit under the Fair Debt Collection Act, arguing that the 2008 and 2009 attempts to collect on the judgment violated the FDCA, mooting the default judgment entered in 2009. The lower courts found against the Petitioner due to a statute of limitations within the FDCA that indicates that challenges to actions attempting to collect a debt must be brought within one year of the FDCA violation that is alleged. Since the alleged violation (an attempt to collect the debt after the period allowed by the FDCA) had occurred in 2008 or 2009 (depending on whether the first, dismissed court case counted), by the time suit was commenced in 2015 it was well after one year since the violation would have occurred.
The question brought by this case was whether the one year limitations period specified in the statute was subject to a so called "discovery rule," meaning that rather than commencing one year from the violation itself, the limitations period instead should be viewed as running one year from the discovery of a violation of the FDCA. Secondarily, the Court was also asked to determine whether there was any other equitable principle which would cause the limitations period not to run.
The decision of the Court was written by Thomas, and was joined by the Chief Justice along with Justices Breyer, Alito, Sotomayor, Kagan, Gorusch and Kavanaugh. Sotomayor also wrote a short concurrence. Justice Ginsburg wrote a partial dissent and dissent from the judgment, which went unjoined by her colleagues.
The majority opinion was straightforward. The statute of limitations written into the FDCA is very clear in saying that an action under it may be brought "within one year from the date on which the violation occurs." Even when there is straightforward language like this, there can be surprises in the law ... it doesn't always mean what it seems to say ... but the Court here noted that not only is the language used quite clear as the limitations period in question, it is also quite clear that Congress was well aware at the time the FDCA was drafted of how to include a discovery rule into a statute of limitations and regularly did so when it wanted to. It's absence here can therefore not be attributed to lack of understanding of how to accomplish such a task. Congress made a specific choice balancing the interests of protecting consumers (the purpose of the act itself) against the interest in not having old and stale suits brought in court. That choice of balancing is properly done by Congress, not by judges reading new provisions into existence that don't exist, argues Thomas, and therefore it is quite clear that there is no discovery rule included into the statute of limitations period here. This being Thomas, he even dragged out an old Scalia gem from 2001 calling expansive, unjustified readings of statute of limitations provisions are a "bad wine of recent vintage" - in other words, poor judging. Over-the-top Scalia flourishes aside, the argument here is straightforward and I can find no fault in it. Congress quite clearly did not intend for suits to last forever, even though that will mean that some people who have been harmed under the act will miss out on relief.
The second question, however, is trickier. An equitable principle known as the fraud-based discovery rule also exists, and holds that when a delay in a suit being brought under any act (not just the FDCA, but anywhere a statute of limitations applies) as a result of fraud on the part of the person being sued, the defendant should not be able to profit from their fraud by relying on the statute of limitations to protect them. This equitable doctrine stands aside from the text of any statute and would be utilized by the courts to ensure fairness. Thomas and the majority of the Justices here dismissed this argument on the grounds that it given up by the Petitioner since it was not argued in the courts below nor explicitly discussed in the briefs to Supreme Court for this argument. As a result, the Court ruled that the Petitioner had in effect waived his right to the argument.
This was the reason for Justice Ginsburg's dissent in the case. In her opinion, the Petitioner had stated several times that he believed fraud was involved with the case. While Justice Ginsburg acknowledged that the pleading to the Supreme Court wasn't going to win any awards for artful pleading, she still felt it was an obvious element of the claims being made and that the Petitioner had therefore done enough to preserve the argument. As none of her fellow Justices agreed with her position, however, the Petitioner will have to simply accept his loss on this one.
Finally, Justice Sotomayor's short concurrence was simply to point out that the quip about "bad wine of a recent vintage." Justice Sotomayor made sure to point out that this quip was not in relation to the fraud-induced discovery rule, but instead to the earlier doctrine of reading into a statute a generalized discovery rule. As a result, she emphasizes that parties should feel free to continue using that doctrine in other cases.
This was a straightforward case involving statutory interpretation, and while I generally support expansive periods of limitations (at least 3 years would I feel be a better balance between creditor and lender rights), that isn't a question for the courts to decide but one for Congress to decide. Perhaps this case will serve as an impetus for Congress to look at this question again and increase the limitations period. In any case, the Court has now clarified how it stands on the issue with the language that is in place, and has seemingly done so correctly.
A default judgment was entered against the Petitioner at trial (again, since he was a no-show). It would not be until 2015, when applying for a mortgage, that the Petitioner would discover the default judgment against him. He then brought suit under the Fair Debt Collection Act, arguing that the 2008 and 2009 attempts to collect on the judgment violated the FDCA, mooting the default judgment entered in 2009. The lower courts found against the Petitioner due to a statute of limitations within the FDCA that indicates that challenges to actions attempting to collect a debt must be brought within one year of the FDCA violation that is alleged. Since the alleged violation (an attempt to collect the debt after the period allowed by the FDCA) had occurred in 2008 or 2009 (depending on whether the first, dismissed court case counted), by the time suit was commenced in 2015 it was well after one year since the violation would have occurred.
The question brought by this case was whether the one year limitations period specified in the statute was subject to a so called "discovery rule," meaning that rather than commencing one year from the violation itself, the limitations period instead should be viewed as running one year from the discovery of a violation of the FDCA. Secondarily, the Court was also asked to determine whether there was any other equitable principle which would cause the limitations period not to run.
The decision of the Court was written by Thomas, and was joined by the Chief Justice along with Justices Breyer, Alito, Sotomayor, Kagan, Gorusch and Kavanaugh. Sotomayor also wrote a short concurrence. Justice Ginsburg wrote a partial dissent and dissent from the judgment, which went unjoined by her colleagues.
The majority opinion was straightforward. The statute of limitations written into the FDCA is very clear in saying that an action under it may be brought "within one year from the date on which the violation occurs." Even when there is straightforward language like this, there can be surprises in the law ... it doesn't always mean what it seems to say ... but the Court here noted that not only is the language used quite clear as the limitations period in question, it is also quite clear that Congress was well aware at the time the FDCA was drafted of how to include a discovery rule into a statute of limitations and regularly did so when it wanted to. It's absence here can therefore not be attributed to lack of understanding of how to accomplish such a task. Congress made a specific choice balancing the interests of protecting consumers (the purpose of the act itself) against the interest in not having old and stale suits brought in court. That choice of balancing is properly done by Congress, not by judges reading new provisions into existence that don't exist, argues Thomas, and therefore it is quite clear that there is no discovery rule included into the statute of limitations period here. This being Thomas, he even dragged out an old Scalia gem from 2001 calling expansive, unjustified readings of statute of limitations provisions are a "bad wine of recent vintage" - in other words, poor judging. Over-the-top Scalia flourishes aside, the argument here is straightforward and I can find no fault in it. Congress quite clearly did not intend for suits to last forever, even though that will mean that some people who have been harmed under the act will miss out on relief.
The second question, however, is trickier. An equitable principle known as the fraud-based discovery rule also exists, and holds that when a delay in a suit being brought under any act (not just the FDCA, but anywhere a statute of limitations applies) as a result of fraud on the part of the person being sued, the defendant should not be able to profit from their fraud by relying on the statute of limitations to protect them. This equitable doctrine stands aside from the text of any statute and would be utilized by the courts to ensure fairness. Thomas and the majority of the Justices here dismissed this argument on the grounds that it given up by the Petitioner since it was not argued in the courts below nor explicitly discussed in the briefs to Supreme Court for this argument. As a result, the Court ruled that the Petitioner had in effect waived his right to the argument.
This was the reason for Justice Ginsburg's dissent in the case. In her opinion, the Petitioner had stated several times that he believed fraud was involved with the case. While Justice Ginsburg acknowledged that the pleading to the Supreme Court wasn't going to win any awards for artful pleading, she still felt it was an obvious element of the claims being made and that the Petitioner had therefore done enough to preserve the argument. As none of her fellow Justices agreed with her position, however, the Petitioner will have to simply accept his loss on this one.
Finally, Justice Sotomayor's short concurrence was simply to point out that the quip about "bad wine of a recent vintage." Justice Sotomayor made sure to point out that this quip was not in relation to the fraud-induced discovery rule, but instead to the earlier doctrine of reading into a statute a generalized discovery rule. As a result, she emphasizes that parties should feel free to continue using that doctrine in other cases.
This was a straightforward case involving statutory interpretation, and while I generally support expansive periods of limitations (at least 3 years would I feel be a better balance between creditor and lender rights), that isn't a question for the courts to decide but one for Congress to decide. Perhaps this case will serve as an impetus for Congress to look at this question again and increase the limitations period. In any case, the Court has now clarified how it stands on the issue with the language that is in place, and has seemingly done so correctly.