Eighth Circuit Decertifies Four FDCPA Classes Where District Court Failed to Conduct Rigorous Analysis Required by Wal-Mart Stores, Inc. v. Dukes

The Eighth Circuit recently held that a district court abused its discretion by certifying four classes of Nebraska consumers in an action against a debt collector and its attorneys for alleged violations of the Fair Debt Collection Practices Act (“FDCPA”) and the Nebraska Consumer Protection Act (“NCPA”) based on the defendants’ use of standard-form pleadings and discovery requests in state court collection actions. In so holding, the Eighth Circuit emphasized that the underlying debts, the relief sought in the state court collection actions, and the outcome of those cases would vary amongst class members; hence, the classes could only be certified if the “standard-form complaints and discovery requests, on their face, violated the FDCPA and therefore the NCPA.”

The court then performed a “rigorous analysis” of the subclasses, looking first at the standard-form complaint classes to determine whether the creditors’ claims for prejudgment interest per se violated the FDCPA and NCPA. Because the question of whether a claim for prejudgment interest was “unfair or unconscionable” required an examination of individual class members’ separate claims and collection suits, the court found that these subclasses failed to meet the commonality, superiority, and predominance requirements of Rule 23.

Next, with regard to plaintiffs’ claims related to standard-form discovery requests, the Eighth Circuit “decline[d] to adopt an inflexible rule that the FDCPA can never apply to discovery requests made directly to the consumer’s attorney.” However, the court refused to employ the usual “unsophisticated consumer” standard to such communications and applied a “competent lawyer” standard instead. The court held that because individualized inquiries were required to determine if discovery requests were unreasonable and irrelevant as to each class member, these subclasses also did not meet Rule 23’s commonality and predominance requirements.

In addition to decertifying the four classes, the Eighth Circuit criticized the district court for its failure to resolve the parties’ pending summary judgment motions prior to certification, which might have “obviated the need for class certification.”

Powers v. Credit Mgmt. Servs., Inc., No. 13-2831 (8th Cir. Jan. 13, 2015).