Federal District Court in Illinois Applies “Discovery Rule” to FDCPA Claim

On March 27, a Federal District Court in Illinois denied a motion to dismiss a Fair Debt Collection Practices Act (FDCPA) case in which the defendant argued that the lawsuit had been filed after the expiration of the FDCPA's one year statute of limitations.  In the case Skinner v. Midland Funding, LLC (Case No 16-4522, U.S. District Court, ND, IL) the Court held that the “Discovery Rule” applied and that the statute of limitations didn't begin to run until the plaintiff “discovered” the alleged violation, rather than from the date the activity which was alleged to have violated the FDCPA had occurred. A copy of the Memorandum and Order can be found here.

Plaintiff, Lisa Skinner, filed a complaint against Midland Funding, LLC and Midland Credit Management, Inc. on April 21, 2016. Skinner alleged that her debt had been sold to Midland Funding. Between March 2014 and January 2015 Midland charged interest on the debt. Beginning in February 2015, Midland stopped charging interest, but continued to charge for the interest that it had previously applied. Skinner alleged that Midland had violated the FDCPA by charging interest, and that it misrepresented the amount and character of the debt to credit reporting agency Equifax.

Midland argued that Skinner’s claims were barred by the FDCPA's one-year statute of limitations because the interest charges had been appliedin 2014 and early 2015. Skinner responded by arguing that she didn’t discover the FDCPA violations until August 2015, less than a year prior to filing of the suit.

Judge Alonso of the U.S. Court for the Northern District of Illinois found there was no precedent indicating that the discovery rule did not to apply to claims brought under the FDCPA. Judge Alonso found that although there is no explicit evidence of when Skinner became aware of the alleged inaccurate debt reporting, it could be inferred from an August, 2015 credit report that she became aware of the report then. Accordingly Judge Alonso denied the motion to dismiss by Midland Funding, LLC and Midland Credit Management.