Banking and Finance Law Daily Class of all persons who received debt collection letter fails on commonality
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Thursday, January 9, 2020

Class of all persons who received debt collection letter fails on commonality

By Nicole D. Prysby, J.D.

A class defined as all persons who received a particular debt collection letter should not be certified because the plaintiff failed to show that the letter contained a false threat of legal action as to every member of the class.

A class defined as all Texans who received the same letter from the debt collector as the named plaintiff should not be certified, as there is no evidence that the holder of the debt had the same intent toward everyone in the class, held the U.S. Court of Appeals for the Fifth Circuit. A consumer who received a letter from a debt collector argued that the letter contained a false threat of legal action in violation of the Fair Debt Collection Practices Act (FDCPA) because the medical practice that held the debt did not actually intend to sue her to collect it. The federal trial court granted certification of her proposed class, but the Fifth Circuit reversed that decision, finding that the class fails on the commonality requirement. The letter alone is insufficient to certify a class because the medical practice may not have had the same intent towards all debtors. And if the practice would have sued a debtor, then the statement in the debt collection letter was not false. The court also pointed out that the class almost certainly included some individuals who lacked standing, such as people who received the letter but ignored it (Flecha v. Medicredit, Inc., Jan. 8, 2020, Ho, J.).

A consumer failed to pay for medical care, and the medical practice sent the debt to a voluntary debt collection service provider. The debt collector sent the consumer a letter stating that the debt was unpaid and that if she wished to clear her account, she needed to remit the balance in full. The consumer never contacted the debt collector, but she did contact the medical practice to ask about payment plans. She claimed that the conversations with the medical practice and the debt collection letter gave her the impression that the medical practice would sue her to collect the debt. She brought FDCPA claims against the debt collector, alleging that its letter made a false threat of legal action against her in violation of the FDCPA, because the medical practice never intended to sue her over her unpaid debt. She sought and received class certification on the FDCPA claims, with a class defined as all Texans who received the same letter from the debt collector as the consumer (approximately 7,600 people). The debt collector appealed the class certification.

Court’s analysis. The Fifth Circuit pointed out that the relevant inquiry is not only whether the letter would be perceived as threatening legal action, but whether the statements in the letter are false. In other words, did the medical practice intend to bring suit? The putative class fails on commonality because the consumer did not provide any evidence that the medical practice had no intent to sue anyone in the class. The letter alone is insufficient to certify a class because the medical practice may not have had the same intent towards all debtors, and the consumer provided no evidence on the subject, other than a statement that the medical practice "does not sue consumers for medical debt." She provided no depositions from anyone at the medical practice, and the deposition testimony from the debt collector showed that the collector was unaware of the practice’s policy for suing debtors. Her failure to prove commonality also establishes her failure to prove either typicality or predominance.

The court also considered standing of the unnamed class members and concluded that the class definition inevitably included some persons who lacked standing. For example, people who received the letter but ignored it. However, the court declined to decide the issue of standing since it had already determined that the class failed under Rule 23 of the Federal Rules of Civil Procedure.

Judge Oldham filed a concurring opinion, stating that the lack of standing of some of the unnamed class members should be sufficient to decide the case.

The case number is No. 18-50551.

Attorneys: Robert Zimmer (Zimmer & Associates) for Nina Flecha. Maura Kathleen Monaghan (Debevoise & Plimpton LLP) for Medicredit, Inc. Scott James Dickenson (Spencer Fane LLP) for Fidelity and Deposit Co. of Maryland.

Companies: Fidelity and Deposit Co. of Maryland; Medicredit, Inc.

MainStory: TopStory DebtCollection LouisianaNews MississippiNews TexasNews

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