A District Court judge in New York has granted a defendant’s motion to dismiss a Fair Debt Collection Practices Act class-action lawsuit, ruling that the plaintiffs’ claims were time-barred by the FDCPA’s one-year statute of limitations.
The background: The plaintiffs claimed that the defendants attempted to collect student loans in violation of the FDCPA and New York state law. The plaintiffs alleged that the defendants used fraudulent means to collect debts that were too old to be legally enforceable. According to the plaintiffs, the defendants obtained default judgments in state court by filing complaints and affidavits containing falsehoods, such as claiming personal knowledge of the account records when, in fact, the documents were auto-generated and robosigned by non-attorneys. The plaintiffs argued that they were unaware of these practices until the Consumer Financial Protection Bureau published its findings in 2017, which led to a $21.6 million settlement with Transworld Systems and several National Collegiate trusts.
The ruling: The defendants moved to dismiss the case, asserting that the plaintiffs’ claims were barred by the FDCPA’s one-year statute of limitations. In this case, the plaintiffs could have become aware of the alleged violations in 2017, but did not file their lawsuit until 2020. The plaintiffs alleged they did not have all the knowledge they needed to allege the defendants violated the FDCPA until after two other complaints were filed against the defendants earlier in 2020.
- But the plaintiffs didn’t need to have all the information in order to file their suit, ruled Judge Paul G. Gardephe of the District Court for the Southern District of New York.
- Judge Gardephe also noted that while the plaintiffs argued for equitable tolling of the statute of limitations due to the defendants’ alleged fraudulent concealment, they failed to demonstrate the necessary diligence in pursuing their claims or that extraordinary circumstances prevented timely filing.
