Bolin v. Sears, Roebuck & Co.

IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

No. 99-20627

THOMAS R. BOLIN; BILLIE F. BOLIN,
Plaintiffs-Appellees,

STANLEY PATTON; ELENA SMITH; RALPH
FREEZE,
Intervenor Plaintiffs-
Appellees,

versus

SEARS, ROEBUCK & CO.,
Defendant-Appellant.

Appeal from the United States District Court
For the Southern District of Texas

October 27, 2000

Before REYNALDO G. GARZA, JOLLY, and HIGGINBOTHAM, Circuit Judges.

PATRICK E. HIGGINBOTHAM, Circuit Judge:

This interlocutory appeal under Rule 23(f) of the Federal

Rules of Civil Procedure presents defendant Sears, Roebuck & Co.’s

challenge to Rule 23(b)(2) certification of a class of bankrupt

debtors alleging illegal post-bankruptcy collection practices by

Sears. The Bolin plaintiffs raise a second issue: whether 28

U.S.C. § 1292(e), the enabling authority for Rule 23(f), is an

unconstitutional delegation of Congress’s power to confer

jurisdiction on the lower federal courts. We uphold the
constitutionality of § 1292(e). We also vacate the certification

order and remand to the district court to consider the

certification of the class under Rule 23(b)(3) or reformulation of

the class.

I

The Bolin class consists of consumers who purchased

merchandise from Sears on credit, subsequently declared bankruptcy,

and thereafter either made payments to Sears regarding a claimed

security interest or pre-bankruptcy debt, had property repossessed

or garnished, or incurred costs in connection with Sears’s

collection efforts. The district court found that the class

numbers more than one million people.

The plaintiffs contend that Sears employed numerous illegal

practices to coerce payment of otherwise-discharged pre-bankruptcy

debt, including the development of and reliance on a chart

inflating the value of collateral; offers of new credit on

extortionate terms; failure to file redemption and other repayment

agreements; unwarranted assertions of security interests; abusive

litigation practices, including contesting bankruptcy discharges

and filing separate state court actions post-discharge; and making

coercive and threatening communications to debtors, both orally and

in writing.1 The suit seeks injunctive, declaratory, and monetary

1
At oral argument, counsel for Bolin described the
overinflation of collateral value as the heart of the case.

2
relief under a variety of theories, including the Bankruptcy Code,2

RICO,3 and the Truth in Lending Act.4 The case follows on the heels

of a narrower class action in which debtors complained of

violations of the Bankruptcy Code regarding reaffirmation

agreements.5

The plaintiffs moved for certification, and the district court

certified the class under Federal Rule of Civil Procedure 23(b)(2).

Sears petitioned for and was granted interlocutory review under

Rule 23(f). Sears attacks two aspects of the certification order:

that the conduct alleged was generally applicable to the class and

that the damage claims were incidental to the claims for injunctive

relief. Bolin challenges our jurisdiction, arguing that the

enabling authority for Rule 23(f) exceeds Congress’s power to

delegate its jurisdiction-granting authority to the federal courts.

II

We first address our jurisdiction. Bolin challenges the

constitutionality of Federal Rule of Civil Procedure 23(f), which

allows a court of appeals to permit interlocutory review of a

2
See 11 U.S.C. § 362 (automatic stay).
3
See 18 U.S.C. § 1961 et seq.
4
See 15 U.S.C. § 1601 et seq.
5
See Conley v. Sears, Roebuck & Co., 222 B.R. 181, 182-86 (D.
Mass. 1998) (discussing history of case). That case was
conditionally certified under Rule 23(b)(3) for settlement
purposes, and Sears agrees here that the certification of such
claims would be appropriate.

3
district court’s grant or denial of class action certification.6

Bolin argues that 28 U.S.C. § 1292(e), the authorizing authority

for Rule 23(f), exceeds the scope of rulemaking power that Congress

may permissibly delegate to the Supreme Court because only

Congress, not the Court, may confer jurisdiction on the lower

federal courts.

Section 12927 sets forth several specific instances in which

the courts of appeals may hear interlocutory appeals, including of

orders granting or refusing injunctions8 and orders that the

district court finds present controlling questions of law and whose

immediate appeal may materially advance the termination of the

litigation.9 Section 1292(e) then provides:

The Supreme Court may prescribe rules, in accordance with
section 2072 of this title, to provide for an appeal of
an interlocutory decision to the courts of appeals that
is not otherwise provided for under subsection (a), (b),
(c), or (d).10

Rule 23(f) is promulgated pursuant to that authority.

6
See Fed. R. Civ. P. 23(f). The rule was adopted in the 1998
amendments to the Federal Rules.
7
28 U.S.C. § 1292 (2000).
8
See 28 U.S.C. § 1292(a).
9
See 28 U.S.C. § 1292(b).
10
28 U.S.C. § 1292(e).

4
 The proposition that only Congress may confer jurisdiction on

the lower federal courts is a basic constitutional principle.11 At

the same time, Congress may delegate to the courts the power to

regulate their own practice.12 The Supreme Court has upheld

Congress’s power to delegate to federal courts through the Rules

Enabling Act the authority to make rules consistent with Congress’s

statutory mandates.13 The Court has broadly interpreted this

rulemaking authority to encompass activities within the “central

mission” of the judicial branch.14

Here, it is clear that Congress intended to allow the Supreme

Court to make new rules for the availability of judicial review,

including the defining of finality for purposes of appeal.15 The

question is whether Congress’s grant of authority to expand the

circumstances in which interlocutory appeal is allowed constitutes

11
See U.S. CONST. art. III, § 1; Insurance Corp. of Ireland,
Ltd. v. Compagnie des Bauxites de Guinee, 456 U.S. 694, 701-02
(1982).
12
See Wayman v. Southard, 23 U.S.(10 Wheat.) 1, 42-43 (1825)
(Marshall, C.J.).
13
See Sibbach v. Wilson & Co., Inc., 312 U.S. 1, 9-10 (1941)
(Congress may delegate its power to regulate the practice and
procedure of the federal courts).
14
See Mistretta v. United States, 488 U.S. 361, 388-90 (1989)
(holding as permissible Congress’s delegation of authority to the
United States Sentencing Commission, part of the judicial branch,
to promulgate the federal criminal sentencing guidelines).
15
See 28 U.S.C. § 2072(c) (2000) (Rules Enabling Act).

5
a delegation of the power to confer jurisdiction, or rather

rulemaking authority over the courts’ own practices.

The Supreme Court has long fashioned various doctrines through

case law and rules as to the timing of an appeal. For example, in

1949, the Court judicially created the Cohen doctrine, which allows

a party to seek review of an order which finally determines an

important claim of right separate from the merits of an action.16

The Court has also upheld Federal Rule of Civil Procedure 54(b),

which allows a district court to certify a judgment as final if the

underlying order disposes of fewer than all of the issues or

parties in an action;17 the Court found the rule to be a valid

exercise of its rulemaking authority and not contrary to 28 U.S.C.

§ 1291.18 Although both the Cohen doctrine and Rule 54(b) create

an opportunity for appellate review where none was available

before, these creations were deemed permissible rulemaking by the

Court. Finally, the timing rules for appellate review are

generally set forth by rule, not by statute.19

16
See Cohen v. Beneficial Indus. Loan Corp., 337 U.S. 541,
545-547 (1949).
17
See Fed. R. Civ. P. 54(b).
18
See Sears, Roebuck & Co. v. Mackey, 351 U.S. 427, 438
(1956); Cold Metal Process Co. v. United Eng’g & Foundry Co., 351
U.S. 445, 453 (1956).
19
See, e.g., Fed. R. App. P. 3, 4 (regulating taking of
appeals by right).

6
 Thus, the Supreme Court may address the timing of appeals as

interstitial rulemaking without affecting Congress’s authority to

determine the subject matter jurisdiction of the lower federal

courts. Allowance for interlocutory appeal of a class

certification order fits easily within this rubric. Even before

the promulgation of Rule 23(f), parties could seek review of class

certification orders through a writ of mandamus under the All Writs

Act.20 Bolin would distinguish mandamus from appeal under Rule

23(f) because mandamus is granted only under extraordinary

circumstances. We fail to see any constitutional significance,

however, in the frequency with which a rule results in a grant of

interlocutory appeal: either the Supreme Court may permit

interlocutory appeal under certain circumstances, or it may not.

In sum, none of these rules, including Rule 23(f), affect the

matters reviewable by the courts of appeals. They affect only when

those courts may hear the appeals, an issue apart from the right to

confer original jurisdiction on the lower federal courts. We thus

hold that § 1292(e) is a permissible delegation of rulemaking

authority within the judiciary’s central mission.21

20
28 U.S.C. § 1651. See In re Rhone-Poulenc Rorer Inc., 51
F.3d 1293, 1295 (7th Cir. 1995); In re Fibreboard Corp., 893 F.2d
706, 712 (5th Cir. 1990).
21
We also reject Bolin’s argument that § 1292(e) represents
an impermissible repeal of Congress’s statutory mandate under
§ 1292(b). See Clinton v. City of New York, 524 U.S. 417 (1998)
(striking down line-item veto statute). There is no indication in
§ 1292(b) that Congress intended it to be an exhaustive list of the

7
 III

We now address Sears’s appeal of the grant of class

certification, examining whether the certified class fits within

the confines articulated under Rule 23(b)(2). To certify a class

with respect to a claim, the district court must find that the

putative class meets the requirements of Rule 23(a) and fits within

one of the categories of 23(b). Sears does not challenge the

district court’s analysis under Rule 23(a); it contends only that

certification under (b)(2) was an abuse of discretion.

The court may certify a class under Rule 23(b)(2) if “the

party opposing the class has acted or refused to act on grounds

generally applicable to the class, thereby making appropriate final

injunctive relief or corresponding declaratory relief with respect

to the class as a whole.”22 The Advisory Committee Notes and our

cases make clear that injunctive or declaratory relief is not

“appropriate” when the “final relief relates exclusively or

predominantly to money damages.”23 Thus, Rule 23(b)(2) contains two

opportunities for interlocutory appeal; Congress was free to leave
a window in which the Supreme Court could articulate additional
grounds.
22
Fed. R. Civ. P. 23(b)(2). Stated another way, this rule
seeks to redress what “are really group, as opposed to individual
injuries.” See Barnes v. American Tobacco Co., 161 F.3d 127, 143
n.18 (3d Cir. 1998). The uniformity of the injury across the class
is what renders the notice and opt-out provisions of (b)(3)
unnecessary. Id. at 143.
23
Fed. R. Civ. P. 23(b)(2) Advisory Committee Notes. See
Allison v. Citgo Petroleum Corp., 151 F.3d 402, 411 (5th Cir. 1998)
(“We . . . have adopted the position taken by the advisory

8
requirements: (1) behavior generally applicable to the class as a

whole; (2) injunctive relief predominates over damages sought.

Sears challenges the certification under both requirements.

A

Sears argues that the plaintiffs allege only various illegal

acts of debt collection, not actions affecting the class as a

whole. Plaintiffs allege a “pattern or practice” by Sears. Such a

“pattern or practice” must consist of a uniform policy allegedly

applied against the plaintiffs, not simply diverse acts in various

circumstances.24 Certification is improper if the merits of the

claim turns on the defendant’s individual dealings with each

plaintiff.

Here, while some of the challenged practices appear to present

more of a uniform policy than others, several of the practices

cited by Bolin, if proved, would present a case of conduct

applicable to the class: Bolin alleges that the value chart, the

credit offers, the practice of failing to file agreements with the

bankruptcy court, and the form letters were promulgated by central

authority and applied across the board. To the extent they are a

centralized policy, they would be evidenced by Sears’s policy

manuals, customer accounts, and recovery records. These allegations

committee that monetary relief may be obtained in a (b)(2) class
action so long as the predominant relief sought is injunctive or
declaratory.”).
24
See Charles Alan Wright, Arthur R. Miller & Mary Kay Kane,
Federal Practice & Procedure § 1775 at 448 & n.3 (2d ed. 1986).

9
are analogous to the reaffirmation filing issue in the prior class

action, which Sears concedes was properly certified. Thus, the

plaintiffs have alleged behavior generally applicable to the class.

B

Sears also argues that the relief sought is predominantly

monetary damages, not injunctive relief. In Allison v. Citgo

Petroleum Corp.25 we held that “monetary relief predominates . . .

unless it is incidental to requested injunctive or declaratory

relief.”26 We explained that incidental means that “damages [ ] flow

directly from liability to the class as a whole on the claims

forming the basis of the injunctive or declaratory relief.”27 Thus,

damages may be incidental when they are “capable of computation by

means of objective standards and not dependent in any significant

way on the intangible, subjective differences of each class

member’s circumstances. Liability for incidental damages should not

require additional hearings to resolve the disparate merits of each

individual’s case.”28 Allison reflects our concern that plaintiffs

may attempt to shoehorn damages actions into the Rule 23(b)(2)

framework, depriving class members of notice and opt-out

25
151 F.3d 402, 415 (5th Cir. 1998).
26
Id.
27
Id.
28
Id.

10
protections.29 The incentives to do so are large. Plaintiffs’

counsel effectively gathers clients—often thousands of clients—by

a certification under (b)(2). Defendants attempting to purchase res

judicata may prefer certification under (b)(2) over (b)(3). Allison

speaks to these realities.

To determine whether damages predominate, a court should

certify a class on a claim-by-claim basis, treating each claim

individually and certifying the class with respect to only those

claims for which certification is appropriate. It must examine

each claim asserted by the class in the context of the composition

of the class. The specific claims brought by the class identify the

types of relief available to the class.30 The composition of the

class determines which of those types of relief the class is

eligible for and would benefit from.

Certification on a claim-by-claim, rather than holistic, basis

is necessary to preserve the efficiencies of the class action

device without sacrificing the procedural protections it affords to

unnamed class members. In a case such as this one, where claims for

29
When monetary damages vary as to the individual plaintiffs,
class members may determine that they would rather have direct
rather than class representation. Rule 23(c)(2) guarantees this
right to undertake individual litigation by providing the
protections of notice and opt-out in (b)(3) class actions. See Fed.
R. Civ. P. 23(c)(2).
30
The parties for their own reasons did not here analyze the
relief provided for by the statutes the plaintiffs invoke; but one
cannot determine whether computing “damages” requires
individualized computation without defining what “damages” are.

11
injunctive relief intermingle with claims for damages,

certification of a (b)(2) class without individual treatment of the

claims may deny unnamed class members the notice and opt-out

protections of Rule 23(b)(3). On the other hand, denying

certification or certifying under (b)(3) when (b)(2) certification

is appropriate for part of the class eliminates the efficiencies in

adjudication that Rule 23, and specifically (b)(2), create. Rule

23(c)(4) explicitly recognizes the flexibility that courts need in

class certification by allowing certification “with respect to

particular issues” and division of the class into subclasses.

We first review the claims for which the plaintiffs seek class

certification. We then assess the interests of the members of the

class in injunctive relief or damages. Finally, we decide whether

certification under (b)(2) was appropriate for each claim.

(1)

The district court certified the class with respect to claims

under five statutes: the automatic stay provision of the Bankruptcy

Code,31 the Fair Debt Collection Practices Act (FDCPA),32 the Truth

31
11 U.S.C. § 362.
32
15 U.S.C. § 1692 et seq.

12
in Lending Act (TILA),33 the Racketeer Influenced and Corrupt

Organizations Act (RICO),34 and the Declaratory Judgment Act (DJA).35

Section 362 of the Bankruptcy Code authorizes recovery of

actual damages, costs, attorney’s fees, and punitive damages in

cases of willful violation of the automatic stay.36 Plaintiffs also

seek injunctive relief under this section.

The FDCPA authorizes the award of actual damages to class

members, plus up to $1000 per named plaintiff, plus an amount

determined by the court to the remainder of the class.37 The court

may also award costs and reasonable attorney’s fees.38 Plaintiffs

also seek injunctive relief. Because defendant Sears does not

quarrel with this claim, we will assume injunctive relief is

available under the FDCPA.39

33
15 U.S.C. § 1602 et seq.
34
18 U.S.C. § 1961 et seq. (RICO).
35
28 U.S.C. § 2201-02.
36
11 U.S.C. § 362(h).
37
15 U.S.C. § 1692k(a)(1) & (a)(2)(B). The total additional
recovery to unnamed class members is limited to the lesser of
$500,000 or 1 percent of the creditor-defendant’s net worth.
38
15 U.S.C. § 1692k(a)(3).
39
We note, however, that although this circuit has not
definitively ruled on the issue, courts uniformly hold that the
FDCPA does not authorize equitable relief. See Sibley v.
Diversified Collection Services, Inc., 1998 WL 355492, at *5 (N.D.
Tex. 1998); Zanni v. Lippold, 119 F.R.D. 32, 33-34 (C.D. Ill.
1988); Gammon v. GC Services Ltd. Partnership, 162 F.R.D. 313, 319
(N.D. Ill. 1995); and cases cited therein. See also Sibley v.
Fulton DeKalb Collection Service, 677 F.2d 830, 834 (11th Cir.

13
 TILA authorizes award to the class of actual damages plus an

amount determined by the court.40 Plaintiffs also seek injunctive

relief under this statute.

RICO makes defendants liable for treble damages, costs, and

attorney’s fees.41 Plaintiffs also seek injunctive relief under

RICO. Again, we assume this to be available, as defendant Sears

does not take issue with this claim.42

Finally, the plaintiffs seek a declaratory judgment under the

DJA. The DJA, of course, authorizes a declaration that Sears has

1982) (stating in dicta that there is no injunctive relief under
the FDCPA). Washington v. CSC Credit Services Inc., 199 F.3d 263
(5th Cir. 2000), held that similar provisions in the Fair Credit
Reporting Act, 15 U.S.C. § 1681 et seq., do not create a private
injunctive remedy and cited with approval the FDCPA cases. Of
course, the unavailability of injunctive relief under a statute
would automatically make (b)(2) certification an abuse of
discretion.
40
15 U.S.C. § 1640(a)(1) & (a)(2)(B). The total additional
recovery is limited to the lesser of $500,000 or 1 percent of the
creditor-defendant’s net worth.
41
18 U.S.C. § 1964.
42
There is considerable doubt that injunctive relief is
available to private plaintiffs under RICO. See Conkling v. Turner,
18 F.3d 1285, 1296 n.8 (5th Cir. 1994) (listing cases). The only
court of appeals to directly address this issue has held that RICO
does not allow private injunctive relief, see Religious Technology
Center v. Wollerscheim, 796 F.2d 1076, 1082-89 (9th Cir. 1986), and
we have agreed in dicta. See In re Fredeman Litigation, 843 F.2d
821, 830 (5th Cir. 1988) (“We find the analysis contained in the
Wollersheim opinion persuasive. . . . We need not decide, however,
whether all forms of injunctive or other equitable relief are
foreclosed to private plaintiffs under RICO.”).

14
violated the foregoing laws.43 But besides authorizing a declaratory

judgment, the DJA does not create remedies otherwise unavailable to

the plaintiffs.

Some of the damages authorized by these statutes are

susceptible to objective, uniform computation. The supra-

compensatory damages authorized by the FDCPA and TILA require no

individualized calculation, but are awarded to the class as a

whole. Unwinding various settlements or refunding overcharges

pursuant to a standard formula also may not require calculating the

damages of each class member.44

Nonetheless, computation of some components of actual damages

may require more individualized treatment. Determining expenditures

made by class members in defending against Sears’s actions would

require individualized hearings. Further, a finding of RICO fraud

liability requires a showing of reliance by each plaintiff.45

(2)

We now must consider the composition of the class to see which

of these available remedies will benefit the class. The class is

43
See 28 U.S.C. § 2201.
44
The district court found: “Plaintiffs request the return of
any money paid to Sears pursuant to an illegal reaffirmation
agreement or settlement. In order to recover any damages the class
members would be required to show proof of prior payments. The
amount of damages is predetermined . . . .” Order, Bolin v. Sears
Roebuck and Co., No. H-97-1389, at 25 (S.D. Tex. June 6, 1999). We
need not review the accuracy of that finding.
45
See Summit Properties Inc. v. Hoechst Celanese Corp., 214
F.3d 556, 558-60 (5th Cir. 2000).

15
composed of bankrupt debtors who, since 1988, have either paid

money to Sears post-petition, had property repossessed or

garnished, or have expended legal fees connected with Sears’s

collection efforts. Most of the class consists of individuals who

do not face further harm from Sears’s actions. These plaintiffs

have nothing to gain from an injunction, and the declaratory relief

they seek serves only to facilitate the award of damages.46 Thus,

the definition of the class shows that most of the plaintiffs are

seeking only damages.

(3)

The district court abused its discretion in certifying the

class under (b)(2) with respect to section 362 of the Bankruptcy

Code. The vast majority of the class stands to benefit only from

its damages provisions; even for the members of the class who would

benefit from injunctive relief, some of the monetary relief sought

would not be incidental to the injunctive relief.

Likewise, (b)(2) certification of the class with respect to

the FDCPA was an abuse of discretion. Although much of the monetary

relief available under the FDCPA can be easily computed, most of

the class does not stand to benefit from any injunctive relief that

46
Sears also claims none of the class representatives would
benefit from an injunctive remedy, as Sears’s actions against them
have ceased. Sears was suing one representative in state court
when the federal suit began, however. Although it abandoned that
suit, that controversy may not have been mooted. The action was
taken after the filing of this suit, and other class members may
still face litigation by Sears. See Sosna v. Iowa, 419 U.S. 393,
399-402 (1975).

16
may be available under that statute. Thus, whether the monetary

relief is incidental to the injunctive relief sought is not an

issue, since monetary relief is effectively the sole remedy sought.

The analysis for TILA is identical to that for the FDCPA. Rule

23(b)(2) certification with respect to that claim was an abuse of

discretion.

The analysis for RICO parallels the section 362 analysis.

Further, the individual findings of reliance necessary to establish

RICO liability and damages preclude not only (b)(2) certification

of this class under RICO, but (b)(3) certification as well.47

Nor was certification under the DJA proper. The mere

recitation of a request for declaratory relief cannot transform

damages claims into a Rule 23(b)(2) class action. Rule 23(b)(2)

states that certification is proper for a class seeking “final

injunctive relief or corresponding declaratory relief.”48 Thus, the

declaratory relief must “as a practical matter afford[ ] injunctive

relief or serve[ ] as a basis for later injunctive relief.”49 The

extent to which the declaratory relief sought satisfies Rule

47
In this case, individualized determinations of reliance
would defeat the predomination requirement of Rule 23(b)(3). Bolin
suggests proving reliance by having each plaintiff submit an
affidavit, see Chisolm v. TransSouth Fin. Corp., 184 F.R.D. 556,
565 (E.D. Va. 1999); this would not be practical here because of
the size of the class.
48
Fed. R. Civ. P. 23(b)(2) (emphasis added).
49
Fed. R. Civ. P. 23(b)(2) Advisory Committee Notes. For
discussion, see Charles Alan Wright, Arthur R. Miller & Mary Kay
Kane, Federal Practice & Procedure § 1775 at 462-63 (2d ed. 1986).

17
23(b)(2) is thus no greater than the extent to which the

substantive statutes underlying the claim for declaratory relief

satisfy Rule 23(b)(2). Since certification under none of the

underlying statutes was proper, certification with respect to the

DJA was also an abuse of discretion.

IV

In sum, we conclude that certification of the class with

respect to each claim was an abuse of discretion. The fundamental

flaw in the certification of each claim was that, for most of the

class, damages will be the only meaningful relief obtained. Most

of the class has an interest in individualized damages

determinations that Rule 23(b)(2) does not protect. These class

members—individuals who do not presently or imminently face

action by Sears to recover pre-bankruptcy debts—must be certified

under 23(b)(3), if at all.

We VACATE the district court’s certification order and

REMAND to the district court for reconsideration of the

certification question. On remand, the district court may

consider class certification under (b)(3) for those claims that

meet the requirements of Rule 23. We do not today rule on whether

certification of some claims under Rule 23(b)(3), or

certification of a modified class with respect to some of the

claims under Rule 23(b)(2) or (b)(3), would be proper.

VACATED and REMANDED.

18
19