488 B.R. 695
Bankr. D.N.M.2013Background
- Plaintiffs allege Defendant violated the discharge injunction by post-discharge credit reporting in about 1,600 NM bankruptcy cases and seek injunctive/declaratory relief (Class 1) and damages (Class 2).
- Certification of Class 1 and Class 2 occurred in October 2008; Defendant moves to decertify under Rule 23(c)(1)(C) in light of changed law and new evidence.
- Class 1 is defined to include those discharged since 1997 with debts to Defendant listed or owed pre-petition; Class 2 requires damages and/or coercion to pay discharged debts and unknown size.
- Evidence shows up to 80% of the time Defendant did not update credit reports to reflect discharge, but continued reporting as past due; under Paul, such reporting is not per se a violation and must have a prohibited objective effect to violate §524(a)(2).
- Post-certification discovery and evolving law (Wal-Mart, Paul) require a rigorous analysis; the court concludes the classes are not properly defined and fail Rule 23 requirements, making decertification appropriate.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Class 1 is properly defined and meets Rule 23(a) post-Wal-Mart/Paul | Class 1 is adequately defined and presents common questions | Class 1 includes members with no claim and lacks commonality/numerosity/typicality | Decertified; definitions and commonality fail post-Wal-Mart/Paul |
| Whether Class 2 satisfies Rule 23(b)(3) given predominance and unidentified members | Common issues predominate and damages can be determined class-wide | Damages are individualized and members are not adequately identified | Decertified; predominance fails and class membership is inadequately defined |
| Whether the court should reassess certification given changed law and post-certification discovery | Post-certification evidence and law justify reconsideration | Law and discovery undermine the previous certification and mootness concerns arise | Court may decertify; standards require rigorous analysis and current record supports decertification |
Key Cases Cited
- Wal-Mart Stores, Inc. v. Dukes, 131 S. Ct. 2541 (U.S. 2011) (rigorous analysis required for class certification; commonality meaningful only if classwide resolution possible)
- In re Paul, 534 F.3d 1303 (10th Cir. 2008) (objective standard for discharge injunction violations; misreporting can violate injunctive scope if objective effect coerces payment)
- Gen. Tel. Co. of Southwest v. Falcon, 457 U.S. 147 (U.S. 1982) (class certification involves analysis capable of generating common answers; not merely pleadings)
- Amchem Prods., Inc. v. Windsor, 521 U.S. 591 (U.S. 1997) (preeminent framework for Rule 23(b)(3) predominance and superiority findings)
- Rex v. Owens ex rel. State of Okla., 585 F.2d 432 (10th Cir. 1978) (no set formula for numerosity; district court has wide discretion)
- Tabor v. Hilti, Inc., 703 F.3d 1206 (10th Cir. 2013) (post-Wal-Mart heightened standard; trial court may probe beyond pleadings)
- In re Rodriguez, 695 F.3d 360 (5th Cir. 2012) (illustrates class action viability with common issues; caution on uniform liability)