Laura Powers v. Credit Management Services, In
2015 U.S. App. LEXIS 486
| 8th Cir. | 2015Background
- CMS, a Nebraska debt collector, filed thousands of state-court collection suits using standard-form complaints and near-identical discovery requests; named plaintiffs Powers and the Palmers challenged the forms as violating the FDCPA and Nebraska Consumer Protection Act (NCPA).
- Standard complaints alleged >90 days since presentation and sought prejudgment interest citing Neb. Rev. Stat. §§ 25-1801 or 45-104 and sought attorney fees and costs; discovery requests sought detailed financial/employment records including tax returns.
- Plaintiffs sought class certification of four Nebraska classes (claims within FDCPA one-year and NCPA four-year periods); district court certified classes under Rule 23(b)(3) on facial-invalidity theories (that the forms on their face violated FDCPA/NCPA).
- The Eighth Circuit granted interlocutory review under Rule 23(f) and reversed, concluding the district court failed to perform the Rule 23 “rigorous analysis” required to assess whether common issues predominate and whether classwide proof could resolve liability.
- The court emphasized that litigation activities (pleadings/discovery) raise distinct FDCPA questions: whether facial challenges to pleadings and discovery can be adjudicated classwide given required individualized factual inquiries (e.g., whether interest was actually sought/recovered, whether assignee personally presented claims, and whether state-court adjudications preclude federal FDCPA claims).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether CMS’s standard-form complaints seeking prejudgment interest violate FDCPA §1692f(1) (§45-104 cases) | The form alleging entitlement under §45-104 is facially invalid because §45-104 does not apply when the consumer contests the suit, so seeking interest is impermissible | Plaintiffs must prove unfairness/unconscionability and materiality; resolution depends on individual state-court records (whether interest was sought/recovered and whether claim fit §45-104) | Reversed class certification: individual factual/legal inquiries would predominate; district court failed to analyze required individualized proof and preclusion issues |
| Whether CMS’s standard-form complaints alleging >90 days since presentation violate FDCPA §1692f(1) (§25-1801 cases) | The allegation is facially false because assignee did not ‘‘present’’ the claim and so cannot claim interest under §25-1801 | Applicability of §25-1801 to assignees is a state-law question and each suit requires inquiry whether CMS personally presented the claim or relied on assignor; materiality depends on whether interest was sought/recovered | Reversed class certification: plaintiffs’ theory raises individualized inquiries (presentation, recovery, preclusion) defeating predominance |
| Whether CMS’s standard-form discovery requests sent during litigation violate the FDCPA by confusing unsophisticated consumers and demanding irrelevant private information | Discovery instructions/requests are confusing and invasive to consumers and therefore deceptive/unfair under the FDCPA | Discovery was served during pending litigation, often on represented debtors; communications to counsel should be judged by what would mislead a competent lawyer, not an unsophisticated consumer | Reversed class certification: claims require case-specific factual context or proof of systemic abuse; communications to attorneys judged under a "competent lawyer" standard, so classwide adjudication inappropriate |
| Whether the presence of in-house attorney defendants and their individual solvency undermines class superiority and certification | Plaintiffs included in-house attorneys as defendants to obtain relief for class | Defendants noted individual attorneys signed certain filings and have limited net worth, raising questions of liability allocation and incentives for smaller, more favorable subclasses | Reversed: district court erred to ignore how individual-defendant liability and caps on class damages affect superiority and viability of class action |
Key Cases Cited
- Heintz v. Jenkins, 514 U.S. 291 (1995) (FDCPA applies to litigation activities of attorneys who regularly collect consumer debts)
- Jerman v. Carlisle, McNellie, Rini, Kramer & Ulrich, 559 U.S. 573 (2010) (limits on imposing strict liability for attorney mistakes; cautions against absurd results applying FDCPA to litigation conduct)
- Hemmingsen v. Messerli & Kramer, P.A., 674 F.3d 814 (8th Cir. 2012) (declines to treat allegations in a state-court pleading as false for §1692e merely because the state court later found them unsupported)
- Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338 (2011) (class certification requires common questions capable of generating common answers; rigorous Rule 23 analysis)
- Amchem Prods., Inc. v. Windsor, 521 U.S. 591 (1997) (predominance and superiority require careful inquiry into whether class action is superior and manageable)