The Court of Appeals for the Third Circuit has upheld the dismissal of a Fair Debt Collection Practices Act case that attempted to invoke the continuing violation theory because the suit was filed more than a year after the alleged violation occurred.
The background: The case stems from efforts to collect on a defaulted auto loan. After the consumer stopped making payments in 2016, the lender repossessed and sold the car, leaving a deficiency balance. In 2021, more than five years after the default, the lender, represented by a law firm, filed suit in New Jersey state court to collect on the balance. New Jersey law, however, applies a four-year statute of limitations for such claims. The consumer did not raise that defense, resulting in a default judgment and garnishment of wages in 2022.
- In January 2023, the consumer filed an FDCPA lawsuit against the law firm and one of its attorneys, alleging that suing on a time-barred debt and subsequent collection efforts violated the statute.
- This complaint, though, was filed more than a year after the debt collection suit had been initiated, which was outside the FDCPA’s one-year statute of limitations.
- To overcome this, the plaintiff argued that the continuing violation theory applied, and that post-complaint filings and garnishments should count as separate, timely violations.
- A District Court judge granted the defendant’s motion to dismiss the suit, ruling that actions that were taken to proceed with the suit after it was filed were not separate violations of the FDCPA.
The ruling: The Third Circuit agreed with the District Court that the FDCPA claim was untimely. The panel noted that while the continuing violation theory has been applied in contexts like hostile work environment claims, no federal appeals court has extended it to FDCPA cases.
- The ruling explained that “debt collection efforts are separately actionable without relation to any other violations” and therefore do not fall within the narrow category of claims that can be treated as continuing.
- On the argument that later filings and wage garnishments were independent violations, the Court emphasized Supreme Court precedent cautioning against interpretations of the FDCPA that would interfere with ordinary litigation. As the Court put it, accepting that theory “would broaden [the FDCPA] in a manner inconsistent with its original justification”.
