NINA FLECHA, on behalf of herself and all others similarly situated, v. MEDICREDIT, INCORPORATED; FIDELITY AND DEPOSIT COMPANY OF MARYLAND,
No. 18-50551
United States Court of Appeals, Fifth Circuit
January 8, 2020
Appeal from the United States District Court for the Western District of Texas
Before JONES, HO, and OLDHAM, Circuit Judges.
As the Supreme Court has repeatedly reminded us, “the class action is ‘an exception to the usual rule that litigation is conducted by and on behalf of the individual named parties only.‘” Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338, 348 (2011) (quoting Califano v. Yamasaki, 442 U.S. 682, 700-1 (1979)). As
I.
Nina Flecha neglected to pay for the medical care she received from Seton Medical Center Hays. To help Seton collect on that debt, Medicredit, Inc., a voluntary debt collection service provider, sent Flecha a series of collection letters—including the one at the heart of this suit. That letter stated:
Your seriously delinquent Seton Medical Center Hays account remains unpaid despite past requests for payment.
At this time, a determination must be made with our client as to the disposition of your account. Your failure to cooperate in satisfying this debt indicates voluntary resolution is doubtful. However, if it is now your desire to clear your account, you need to promptly remit the balance in full.
The letter concluded: “To discuss payment arrangements call our office.”
Flecha never contacted Medicredit. But she did contact Seton and ask if she was eligible for any debt repayment programs. Seton informed her that she could enter into a payment plan if she made an upfront payment—one Flecha could not afford. Over the course of these conversations, Flecha claims she was given the impression that Seton would sue her to collect her debt.
In response to both the letter from Medicredit and her subsequent conversations with Seton, Flecha brought this suit under the Fair Debt Collection Practices Act (FDCPA) against Medicredit (as well as its surety bondholder, Fidelity and Deposit Company of Maryland). Flecha alleged that Medicredit‘s letter made a false threat of legal action against her, in violation of the FDCPA, because Seton in fact never intended to sue her over her unpaid medical debt.
Flecha sought class certification. She argued that everyone who received the same letter from Medicredit was likewise falsely threatened with legal action that Seton never actually intended to bring, and that everyone was accordingly entitled to statutory damages under the FDCPA. Both Flecha and Medicredit also filed cross-motions for summary judgment.
The district court denied summary judgment. It concluded that questions of fact remained about (1) whether an unsophisticated consumer would construe the Medicredit letter to threaten legal action, and (2) whether Seton intended to take legal action against Flecha.
After disposing of the summary judgment motions, the district court then granted Flecha‘s motion for class certification and appointed her class representative. The court defined the class as all Texans who had received the same letter from Medicredit that Flecha received:
[A]ll persons in Texas from whom Medicredit attempted to collect and who received a form collection letter from Medicredit containing these statements:
Your seriously delinquent Seton Medical Center Hays account remains unpaid despite past requests for payment.
At this time, a determination must be made with our client as to the disposition of your account. Your failure to cooperate in satisfying this debt indicates voluntary resolution is doubtful. However, if it is now your desire to clear your account, you need to promptly remit the balance in full.
Flecha estimates that at least 7,650 people in Texas received such a letter.
We granted Medicredit‘s motion for leave to appeal the class certification order under
In a
The FDCPA prohibits the use of “false, deceptive, or misleading representation[s] or means in connection with the collection of any debt.”
So the question in such suits is not only whether a consumer would perceive a particular statement as threatening legal action, but also whether such a statement is in fact true—that is, whether the creditor does indeed intend to bring suit against the debtor. This element is significant to the class certification question because some creditors may not have a uniform litigation policy when it comes to all debtors. They may instead decide whether to bring suit based on individualized circumstances. And there is no false statement under the FDCPA (or as a matter of common sense) if the threat to bring suit is in fact sincere and true.
III.
“We review class-certification decisions for abuse of discretion. . . . We review de novo, however, whether the district court applied the correct legal standards in determining whether to certify the class.” Gene & Gene LLC v. BioPay LLC, 541 F.3d 318, 325 (5th Cir. 2008) (citing Allison v. Citgo Petroleum Corp., 151 F.3d 402, 408 (5th Cir. 1998)).
To be certified by a district court, the putative class must first satisfy all four threshold conditions of
In addition, Flecha pursued a class under
Courts must enforce the requirements of
On appeal, Medicredit argues that Flecha failed to meet this exacting standard. It contends that the putative class fails the commonality and typicality requirements of
To establish liability under the FDCPA, the class must prove not only that Medicredit‘s letter threatened legal action, but that it did so despite the fact that Seton did not intend to pursue legal action. Yet Flecha failed to provide any evidence concerning Seton‘s intent to sue (or lack thereof)—let alone any evidence of class-wide intent. This lack of evidence concerning Seton‘s class-wide intent is fatal to class certification here.
Under
Commonality requires the plaintiff to demonstrate that the class members have suffered the same injury. This does not mean merely that they have all suffered a violation of the same provision of law. . . . Their claims must depend upon a common contention—for example, the assertion of discriminatory bias on the part of the same supervisor. That common contention, moreover, must be of such a nature that it is capable of classwide resolution—which means that determination of its truth or falsity will resolve an issue that is central to the validity of each one of the claims in one stroke.
Id. at 349-50 (citation and quotations omitted). “What matters to class certification . . . is not the raising of common ‘questions‘—even in droves—but, rather the capacity of a class-wide proceeding to generate common answers apt to drive the resolution of the litigation. Dissimilarities within the proposed class are what have the potential to impede the generation of common answers.” Id. at 350 (quotations omitted).
The putative Title VII sex discrimination class in Dukes failed because the class members “wish[ed] to sue about literally millions of employment decisions at once. Without some glue holding the alleged reasons for all those decisions together, it will be impossible to say that examination of all the class members’ claims for relief will produce a common answer to the crucial question why was I disfavored.” Id. at 352.
This class fails for similar reasons. Every member of the putative class received the same allegedly threatening letter from Medicredit. But the FDCPA penalizes empty threats, not all threats. So the letter alone is insufficient to certify a class. As in Dukes, there is no “glue” here “holding the alleged reasons for all those [letters] together“—namely, evidence of a uniform intention by Seton regarding suit. Id. So it is likewise “impossible to say that examination of all the class members’ claims for relief will produce a common answer to the crucial question” why was I threatened. Id.
And that is because the record here is wholly devoid of any evidence of Seton‘s debt collection practices. Flecha presented no evidence concerning Seton‘s actual intent to sue—either to sue her or others like her.
Rather than require evidentiary support, the district court simply “presume[d] for the purposes of class certification that Medicredit and Seton acted consistently in determining whether to sue the recipient of its letters.” But courts must certify class actions based on proof, not presumptions. See, e.g., Gen. Tel. Co. of Sw. v. Falcon, 457 U.S. 147, 160 (1982) (“[A]ctual, not presumed, conformance with Rule 23(a) remains [] indispensable.“); Berger v. Compaq Comput. Corp., 257 F.3d 475, 481 (5th Cir. 2001) (“The district court unquestionably adopted an incorrect legal standard by stating that ‘[t]he adequacy of the putative representatives and of plaintiffs’ counsel is presumed in the absence of specific proof to the contrary.’ This is error; the party seeking certification bears the burden of establishing that all requirements of rule 23(a) have been satisfied.“).
So Flecha failed to carry her burden to “affirmatively demonstrate” commonality. Dukes, 564 U.S. at 350. She failed to demonstrate that her claim that Medicredit falsely threatened to take legal action against class members is capable of classwide resolution. And so that leaves the class without a common issue.
Her failure to prove commonality also establishes her failure to prove either typicality or predominance. After all, if there is no common issue uniting the putative class, Flecha‘s claim can‘t be “typical of the claims or defenses of the class.”
In sum, the putative class fails under
IV.
Because the class fails under
Our court has not yet decided whether standing must be proven for unnamed class members, in addition to the class representative. See, e.g., In re Deepwater Horizon, 785 F.3d 1003, 1018-20 (5th Cir. 2015). But some circuits have held that “no class may be certified that contains members lacking Article III standing.” Denney v. Deutsche Bank AG, 443 F.3d 253, 264 (2d Cir. 2006).
That is significant, because there are undoubtedly many unnamed class members here who lack the requisite injury to establish Article III standing. After all, the putative class sweeps in “all persons in Texas . . . who received a form collection letter” from Medicredit. As a result, the putative class inevitably includes people who received the letter, but ignored it as junk mail or otherwise gave it no meaningful attention—and therefore lack a cognizable injury under Article III.
That said, we do not reach the issue. That is because the Supreme Court has repeatedly instructed that we should first decide whether a proposed class satisfies
After all, if there is no class action under
To be sure, if it is the class representative who presents a standing problem, then that standing issue must be addressed first, prior to deciding class certification. After all, if the class representative lacks standing, then there is no Article III suit to begin with—class certification or otherwise. See, e.g., Rivera v. Wyeth-Ayerst Labs, 283 F.3d 315, 319 n.6 (5th Cir. 2002) (“In the instant case, in contrast to Ortiz and Amchem, the standing question would exist whether Rivera filed her claim alone or as part of a class; class certification did not create the jurisdictional issue.“); Ford v. NYLCare Health Plans, 301 F.3d 329, 333 (5th Cir. 2002) (same).
But if it is only the unnamed class members who present a standing problem, then we are duty-bound to follow Amchem and Ortiz. Under those precedents, if there is no class action, then there is no need to analyze the Article III standing of the unnamed members of a non-existent class.
In this case, no one alleges that Flecha herself has an Article III problem. The only issue is whether the unnamed class members have standing. And under Amchem and Ortiz, that standing issue is “moot,” because the class fails under
* * *
The reversal of the class certification order here could mean that legitimate claims will go unheard. This may be a “negative value suit,” “in which class members’ claims ‘would be uneconomical to litigate individually.‘” In re Monumental Life Ins. Co., 365 F.3d 408, 411 n.1 (5th Cir. 2004) (quoting Phillips Petroleum v. Shutts, 472 U.S. 797, 809 (1985)).
But the Supreme Court has made clear that fear of underenforcement is no justification for class certification. See, e.g., Am. Exp. Co. v. Italian Colors Rest., 570 U.S. 228, 234 (2013) (
Accordingly, we reverse the class certification order and remand for further proceedings.
ANDREW S. OLDHAM, Circuit Judge, concurring:
I agree with the Court‘s excellent opinion that the class must be decertified. I also agree with the Court‘s conclusion that “[c]ountless unnamed class members lack standing.” Ante, at 8. In my view, that lack of standing is sufficient to decide the case.
I.
Standing is “an essential and unchanging part of the case-or-controversy requirement of Article III.” Lujan v. Defs. of Wildlife, 504 U.S. 555, 560 (1992). With it, the Constitution empowers us to hear a case before us and decide the relevant issues of law. Without it, we can do nothing but announce the fact and dismiss the case. See Ex parte McCardle, 74 U.S. (7 Wall.) 506, 514 (1868). After all, “[h]ypothetical jurisdiction produces nothing more than a hypothetical judgment.” Steel Co. v. Citizens for a Better Env‘t, 523 U.S. 83, 101 (1998).
It‘s unclear to me why these venerable principles would not apply with equal force at the class-certification stage. A plaintiff must show standing at each “successive stage[] of the litigation.” Lujan, 504 U.S. at 561; see also Arizonans for Official English v. Arizona, 520 U.S. 43, 64-65 (1997). Nothing in
II.
It‘s true that the Supreme Court in both Amchem and Ortiz avoided the Article III standing question. The Court did so, in part, by stating that certification “pertain[s] to statutory standing.” Ortiz, 527 U.S. at 831. And at the time, the Court held statutory standing “may properly be treated before Article III standing.” Ibid. That makes sense where both questions—whether the plaintiffs can sue under
But the Supreme Court subsequently told us they‘re not. In Lexmark Intern., Inc. v. Static Control Components, Inc., 572 U.S. 118 (2014), the Court emphasized that the label “statutory standing” is “misleading” because the inquiry “does not implicate subject-matter jurisdiction, i.e., the court‘s statutory or constitutional power to adjudicate the case.” Id. at 128 n.4 (quotation omitted). That suggests it‘s a merits question whether the unnamed class members can sue under
Article III is just as important in class actions as it is in individual ones. See Tyson Foods, Inc. v. Bouaphakeo, 136 S. Ct. 1036, 1053 (2016) (Roberts, C.J., concurring) (“Article III does not give federal courts the power to order relief to any uninjured plaintiff, class action or not.“). It‘s why the Court has reminded us that “[i]n an era of frequent litigation, class actions, sweeping injunctions with prospective effect, and continuing jurisdiction to enforce judicial remedies, courts must be more careful to insist on the formal rules of standing, not less so.” Ariz. Christian Sch. Tuition Org. v. Winn, 563 U.S. 125, 146 (2011). I‘d do so here.