5th Circuit Decertifies Debt Collection Letter Recipients’ Class Action Lawsuit

The U.S. Court of Appeals for the Fifth Circuit recently decertified an FDCPA class of Texas residents who had received the same debt collection letter, which contained a purportedly empty threat to pursue litigation.

The plaintiff alleged that the debt collector violated the Fair Debt Collection Practices Act (FDCPA) because it threatened litigation in connection with her unpaid medical bills even though the medical care provider did not intend to sue her.  The U.S. District Court for the Western District of Texas certified a class consisting of all Texas residents who had received the letter, estimated by the plaintiff to consist of about 7,650 people.

The Fifth Circuit decertified the class.  The court noted that there is no violation of the FDCPA if a debt collection letter is truthful because the creditor intends to sue the recipient as threatened.  The certified class violated Federal Rule of Civil Procedure 23(a)(2)’s commonality requirement, because an individual inquiry was required to determine whether the defendant intended to pursue litigation against each person who received the debt collection letter.  Although the plaintiff had alleged that the medical care provider had a pattern and practice of not pursuing such litigation, the plaintiff did not produce any evidence that the medical care provider did not intend to pursue litigation against her, let alone any demonstration of that intent on a class-wide basis.  For the same reason, the class did not fulfill the class certification requirements of typicality and predominance under Rule 23.

In addition, the opinion noted that many unnamed class members did not suffer an injury sufficient to establish Article III standing.  Although the panel did not decertify the class on that basis, one judge on the panel stated in a concurrence that a class cannot include class members who do not have standing, and that he would have decertified the class for that reason.