A recent Ninth Circuit decision confirmed that the one-year statute of limitations under the Fair Debt Collection Practices Act (FDCPA) begins to run when a collection attorney takes the last action that could independently violate the statute. The case, Brown v. Transworld Sys., Inc., _F.4th_, 2023 U.S. App. LEXIS 17934 (9th Cir. 2023), also held that the determination of whether a lawyer's conduct or communications made during a collection lawsuit violate the FDCPA is a fact-intensive inquiry that requires a case-by-case examination.

The collector in Brown served on February 16, 2019, and subsequently filed on April 5, 2019, a series of student loan collection lawsuits on behalf of a group of Trusts against the debtor, each of which attached an affidavit of Jennifer Audet declaring that the Trusts owned the underlying student loan debt. Id. at *5. When Brown later questioned whether the Audet affidavits were sufficient to prove the assignment to the Trusts, on October 7, 2019, the collector filed an affidavit of Bradley Luke which also averred that the Trust owned the debts. Id. The state court ruled that the Luke affidavit was hearsay and excluded it, and then granted summary judgment in favor of Brown.

Brown then filed a putative FDCPA class action on April 6, 2020, alleging, inter alia, that defendants filed “a knowingly meritless debt collection lawsuit.” Id. at *6. The district court granted the defendants’ motion to dismiss, concluding that the FDCPA claim was time-barred “because more than a year had elapsed between when Defendants served Brown with their debt collection suit and when Brown filed his FDCPA claim.” Id. at *7. The Ninth Circuit reversed. 

The Ninth Circuit confirmed in Brown that “there is no continuing violation doctrine in the FDCPA context, which would allow plaintiffs to sweep in a series of component acts that comprise a claim, if one of those acts was within the limitations period." Id. at *25. To the contrary, "the only kinds of claims a plaintiff can bring are discrete violations of the FDCPA." Id. To determine whether a litigation act constitutes an “independent violation of the FDCPA” and thus has its own statute of limitations, the court must consider: “(1) the debt collector's last opportunity to comply with the statute and (2) whether the date of the violation is easily ascertainable.” Id. at *17. In Brown, because the collector filed a new affidavit during the middle of the litigation seeking to prove that its clients owned the debts, the Ninth Circuit found there was an independent violation of the FDCPA, and it reversed the trial court’s dismissal of the claim. Id. at *23.

After noting that “every alleged FDCPA violation triggers its own one-year statute of limitations” and upon reviewing some of its past decisions, the Court fashioned a test to determine “whether a litigation act constitutes an independent violation of the FDCPA and thus has its own statute of limitations” as follows: “When the alleged FDCPA violation is the bringing of a debt collection lawsuit, we determine which actions constitute independent FDCPA violations by considering (1) the debt collector's last opportunity to comply with the statute and (2) whether the date of the violation is easily ascertainable.” Id. at *17. It is not sufficient, however, that the collector simply has not dismissed the lawsuit. The Court made clear that the debtor must allege “specific actions taken by the debt-collector that show more than another attempt to argue that a violation arising from the filing of a debt-collection suit continues as long as the suit remains pending.” Id. at *18. The Court stated: “Put simply, to plausibly allege that a litigation act is a violation of the FDCPA, the debtor must aver sufficient facts to show that the debt collector's act is a new violation of the FDCPA. Under our newly formulated test, the focus appropriately remains on the debt collector's actions. There is a difference between litigating a case and committing affirmative FDCPA violations during that litigation.” Id.

Applying the new test, the Ninth Circuit held the debtor had plausibly alleged an independent mid-litigation violation of the FDCPA that fell within the one-year limitations period, namely, submitting the Luke affidavit in the state court action on October 7, 2019. “By filing a new affidavit that attempted to show that the Trusts owned the debts, Defendants did more than "reaffirm" the original complaint. Rather, they presented a new basis—not contained in the complaint—to show that the Trusts owned the debts. When Defendants ceased to rely on the Audet Affidavit and moved forward with the Luke Affidavit, this discrete event created a "last opportunity to comply" with the FDCPA. The filing date is also easily ascertainable.” Id. at *23. Although the Court concluded that Brown had “alleged a violation” it also pointed out that it did “not address the merits of his claim.” Id. at *24.

The Brown decision provides an important reminder to collectors and creditors who retain them that ongoing collection litigation activity may trigger independent violations of the FDCPA that can extend the period of FDCPA exposure well beyond the date a collection lawsuit is filed. 

If you have any questions, please contact Tomio Narita or the Womble Bond Dickinson attorney with whom you usually work.