Case: 18-11420 Date Filed: 10/29/2019 Page: 1 of 28
[PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
________________________
No. 18-11420
________________________
D.C. Docket No. 3:15-cv-01106-TJC-PDB
RANDOLPH SELLERS,
individually and on behalf of a class of persons similarly situated,
TABETHA SELLERS,
individually and on behalf of a class of persons similarly situated,
Plaintiffs - Appellants,
versus
RUSHMORE LOAN MANAGEMENT SERVICES, LLC,
Defendant - Appellee.
________________________
Appeal from the United States District Court
for the Middle District of Florida
________________________
(October 29, 2019)
Case: 18-11420 Date Filed: 10/29/2019 Page: 2 of 28
Before WILSON, JILL PRYOR, and THAPAR,∗ Circuit Judges.
JILL PRYOR, Circuit Judge:
After Randolph and Tabetha Sellers filed for Chapter 7 bankruptcy, the
bankruptcy court issued a discharge order, which relieved them from personal
liability on their discharged debts and generally barred creditors from taking
actions to collect those debts. Despite the discharge order, Rushmore Loan
Management Services, LLC, the servicer for the Sellerses’ home mortgage, sent
them monthly statements for their mortgage.
Because Rushmore sent statements after the discharge order was entered, the
Sellerses sued Rushmore seeking class certification on claims arising under the
Fair Debt Collection Practices Act (“FDCPA”), 15 U.S.C. § 1692 et seq., and the
Florida Consumer Collection Practices Act (“FCCPA”), Fla. Stat. § 559.55 et seq.
The Sellerses alleged that Rushmore made false, deceptive, and misleading
representations when it sent mortgage statements and attempted to collect on their
mortgage debt after they received a Chapter 7 discharge. The district court denied
class certification, concluding that for each claim individualized inquiries
predominated over issues common to the proposed class. In reaching this
conclusion, the district court relied, at least in part, on its determination that the
∗ Honorable Amul R. Thapar, United States Circuit Judge for the Sixth Circuit, sitting by
designation.
2
Case: 18-11420 Date Filed: 10/29/2019 Page: 3 of 28
question of “whether the Bankruptcy Code precluded and/or preempted the
FDCPA and FCCPA” presented an individualized rather than a common issue.
Doc. 62 at 9. 1
The Sellerses appeal the district court’s denial of class certification. After
careful review and with the benefit of oral argument, we conclude that the district
court abused its discretion when it determined that Rushmore’s preclusion/
preemption defense raised an individualized issue. We vacate and remand so that
the district court may consider again the Sellerses’ class certification motion in
light of our conclusion that this question is common to all class members.
I. FACTUAL BACKGROUND
The Sellerses obtained a loan secured by a mortgage lien on their home in
Keystone Heights, Florida. When they defaulted on the loan, the holder of the
mortgage filed a foreclosure action. While the foreclosure action was pending, the
Sellerses moved out of the home.
After moving out, the Sellerses filed for Chapter 7 bankruptcy, which
triggered a stay of the foreclosure action. In the bankruptcy proceeding, the Sellers
did not reaffirm the mortgage debt. The bankruptcy court entered a discharge
order, which functioned as an injunction that generally prohibited the Sellerses’
creditors from taking any steps to collect the discharged debts. See 11 U.S.C.
1
Citations in the form “Doc. #” refer to numbered entries on the district court’s docket.
3
Case: 18-11420 Date Filed: 10/29/2019 Page: 4 of 28
§ 524(a)(2) (stating that the discharge order “operates as an injunction against . . .
an act[] to collect, recover or offset any such debt as a personal liability of the
debtor”). With respect to the mortgage debt, the discharge order released the
Sellerses from personal liability on the mortgage, but the mortgage holder
continued to have a lien against the property. See Dewsnup v. Timm, 502 U.S. 410,
418 (1992). If the Sellerses had remained in their home, the Bankruptcy Code
would have allowed the mortgage holder to try to collect on the mortgage so long
as its actions were limited to “seeking or obtaining periodic payments” in lieu of
foreclosing on the home. See 11 U.S.C. § 524(j).
About two years after the discharge order was entered, Rushmore took over
servicing the Sellerses’ loan. Despite the discharge, Rushmore sent the Sellerses
monthly mortgage statements that appeared to seek payment on the mortgage debt.
For a period of eight months, Rushmore sent the Sellerses monthly statements in
the form of “Mortgage Statement I.”2 In the top right corner of these statements
was a box listing the “Payment Due Date” and “Amount Due” along with a notice
that if payment was received after a certain date, a late fee would be charged. Doc.
28-1 at 19. The “Amount Due” was listed as more than $70,000, and it increased
with each monthly statement. Directly below that box was a disclaimer:
2
A copy of the first page of Mortgage Statement I is appended to this opinion as Exhibit
A.
4
Case: 18-11420 Date Filed: 10/29/2019 Page: 5 of 28
This communication is from a debt collector and any information
received will be used for that purpose. This does not imply that
Rushmore Loan Management Services is attempting to collect money
from anyone whose debt has been discharged pursuant to (or who is
under the protection of) the bankruptcy laws of the United States; in
such instances, it is intended solely for informational purposes.
Id. Below the disclaimer was an “Explanation of Amount Due,” which itemized
the principal, interest, escrow, monthly payment due, total fees and charges, and
overdue payments on the loan. The first page also warned that “IF YOU ARE
[sic] FORECLOSURE OR BANKRUPTCY, the amount listed here may not be
the full amount necessary to bring your account current.” Id. The bottom of the
first page included a detachable payment coupon that listed a “Due Date,” an
“Amount Due,” a “Late P[a]ym[en]t Amount,” and instructions to make checks
payable to Rushmore. Id. In addition, Rushmore included with Mortgage
Statement I an envelope for the Sellerses to use to remit their payment.
Eventually, Rushmore revised its form mortgage statement. For a period of
seven months, Rushmore sent the Sellerses monthly statements in the form of
“Mortgage Statement II.” 3 These statements were in many ways similar to the
Mortgage Statement I form. First, the top of these statements remained the same
with a box listing the “Payment Due Date” and “Amount Due” along with a notice
that if payment was received after a certain date, a late fee would be charged. Doc.
3
A copy of the relevant pages of Mortgage Statement II is appended to this opinion as
Exhibit B.
5
Case: 18-11420 Date Filed: 10/29/2019 Page: 6 of 28
33-9 at 2. Second, the statements continued to include the same disclaimer and
“Explanation of Amount Due” information as the earlier statements. Id. Third, the
statements included the same warning to borrowers “IN FORECLOSURE OR
BANKRUPTCY” that “the amount listed here may not be the full amount
necessary to bring your account current.” Id.
But Rushmore did make some changes to the format of Mortgage Statement
II. The statements no longer included a payment coupon. In place of the payment
coupon, Rushmore printed this disclaimer:
This is an Informational Statement for borrowers in bankruptcy or
borrowers whose debt has been discharged in bankruptcy. It is not an
attempt to collect a debt. Please note that even if your debt has been
discharged in bankruptcy and you are no longer personally liable on the
debt, the lender may, in accordance with applicable law, pursue its
rights to foreclose on the property securing the debt. If you do not wish
to receive informational statements in the future, please call Rushmore
toll-free at (888) 504-6700.
Id. And Rushmore added an additional disclaimer to the end of the statement, at
the bottom of the fifth page:
Rushmore Loan Management Services LLC is a Debt Collector, who is
attempting to collect a debt. Any information obtained will be used for
that purpose. However, if you are in Bankruptcy or received a
Bankruptcy Discharge of this debt, this letter is being sent for
informational purposes only, is not an attempt to collect a debt and does
not constitute a notice of personal liability with respect to the debt.
Id. at 6.
6
Case: 18-11420 Date Filed: 10/29/2019 Page: 7 of 28
During the period when the Sellerses were receiving statements in the form
of Mortgage Statement I, the state court entered a final judgment of foreclosure on
the Keystone Heights home. The property then was sold at a foreclosure sale.
After the final judgment of foreclosure was entered, for a period of ten months,
Rushmore continued to send monthly mortgage statements in the form of Mortgage
Statement I or Mortgage Statement II.
II. PROCEDURAL HISTORY
After receiving the mortgage statements, the Sellerses filed a putative class
action against Rushmore in federal district court, bringing FDCPA and FCCPA
claims. First, the Sellerses alleged that Rushmore violated the FDCPA by sending
monthly mortgage statements that “attempted to collect a debt and represented that
it had a legal right to collect upon discharged monetary amounts.” Doc. 1 at ¶ 46.
The Sellerses alleged that this conduct violated the FDCPA, which prohibits the
use of “false, deceptive, or misleading representation[s]” including by making false
representations about “the character, amount, or legal status of [a] debt.”
15 U.S.C. § 1692e(2)(A). According to the Sellerses, when Rushmore took the
action of sending the monthly statements, it falsely represented that it had a legal
right to collect the mortgage debt from the Sellerses and also falsely represented
the legal status of the debt.
7
Case: 18-11420 Date Filed: 10/29/2019 Page: 8 of 28
Second, the Sellerses alleged that Rushmore’s conduct violated the FCCPA.
By sending the mortgage statements, the Sellerses alleged, Rushmore had
“claim[ed] and attempt[ed] to enforce a debt which was not legitimate and not due
and owing.” Doc. 1 at ¶ 66. As with the FDCPA claim, the Sellerses’ contention
that the debt could not be enforced was based on their allegation that any amounts
they owed on the mortgage “had been discharged by bankruptcy proceedings and
were no longer due and owing.” Id. at ¶ 63.
For each claim, the Sellerses sought to represent a class of similarly situated
Florida consumers to whom Rushmore sent mortgage statements in the forms of
Mortgage Statement I or Mortgage Statement II. The Sellerses alleged that the
class members were entitled to actual damages, statutory damages, punitive
damages, and attorney’s fees for these violations. The Sellerses also sought a
declaration that Rushmore’s conduct was unlawful, an injunction prohibiting
Rushmore from sending documents requesting payment on discharged debts, and
an order requiring Rushmore to “disgorge all ill-gotten gains” under the
Declaratory Judgment Act, 28 U.S.C. § 2201.4 Doc. 1 at ¶ 106.
4
The Sellerses brought a separate FCCPA claim based on Rushmore’s act of sending
them a form requesting their taxpayer identification numbers. Because the district court granted
summary judgment to Rushmore on this claim, it is not before us in this appeal where our review
is limited to the denial of class certification.
8
Case: 18-11420 Date Filed: 10/29/2019 Page: 9 of 28
In its answer, Rushmore denied liability and asserted that the claims should
be not addressed in a class action. Rushmore raised a number of affirmative
defenses, including that the FDCPA and FCCPA claims were “displaced and/or
precluded by the Bankruptcy Code.” Doc. 12 at 29.
Rushmore moved for summary judgment. It argued that it was entitled to
summary judgment because it was not attempting to collect a debt when it sent the
monthly mortgage statements. To establish liability under the FDCPA and
FCCPA, the Sellerses had to establish that Rushmore sent the statements in
connection with collecting a debt. See 15 U.S.C. § 1692e (prohibiting a debt
collector from making “false, deceptive, or misleading representations . . . in
connection with the collection of any debt”); Fla. Stat. § 559.72(9) (prohibiting an
“attempt . . . to enforce a debt when [the debt collector] knows that the debt is not
legitimate”). Rushmore argued that the disclaimers in Mortgage Statement I and
Mortgage Statement II made clear that it was not trying to collect payments from
borrowers who had received bankruptcy discharges but was merely sending them
the statements for informational purposes. In addition, Rushmore contended that it
was not liable under the FDCPA or the FCCPA because the Sellerses’ claims were
“precluded and preempted by the Bankruptcy Code.” Doc. 33 at 13.
The district court denied Rushmore’s summary judgment motion. The court
determined that there were disputed issues of material fact as to whether Rushmore
9
Case: 18-11420 Date Filed: 10/29/2019 Page: 10 of 28
was attempting to collect a debt when it sent the mortgage statements. The court
then considered whether the Bankruptcy Code precluded and preempted the
FDCPA and FCCPA claims. The court determined that these defenses would
apply only if the exception to the discharge injunction in § 524(j) of the
Bankruptcy Code applied. Because the Sellerses had not remained in their home
and were not claiming that Rushmore had violated § 524(j), the court concluded
that it need not decide whether the Bankruptcy Code precluded or preempted the
FDCPA or FCCPA.
The Sellerses moved for class certification. They asked the district court to
certify the following class:
All Florida consumers who (1) have or had a residential mortgage loan
serviced by Rushmore Loan Management Services, LLC, which
Rushmore obtained when the loan was in default; (2) received a Chapter
7 discharge of their personal liability on the mortgage debt; and
(3) were sent a mortgage statement dated September 11, 2013 or later,
in substantially the same form as Mortgage Statement I and/or
Mortgage Statement II, and was mailed to the debtor’s home address in
connection with the discharged mortgage debt.
Doc. 58 at 6 (footnotes omitted).
Rushmore opposed the Sellerses’ motion, arguing that a class should not be
certified for several reasons. Rushmore argued that class certification was
inappropriate because the class included both borrowers who vacated their homes
and borrowers who remained in their homes. Because the Bankruptcy Code set
forth different standards governing the communications a mortgage holder could
10
Case: 18-11420 Date Filed: 10/29/2019 Page: 11 of 28
have with each group, compare 11 U.S.C. § 524(a), with id. § 524(j), Rushmore
claimed the court would need to conduct “an individualized review of the
Bankruptcy Code’s application to [each] borrower.” Doc. 61 at 20. Rushmore
also argued that the court would need to decide whether the Bankruptcy Code
precluded or preempted the FDCPA and FCCPA claims for class members who
remained in their homes but, based on the summary judgment ruling, would not
need to analyze these defenses for class members who vacated their homes.
The district court denied the motion for class certification because it
concluded that the predominance requirement of Federal Rule of Civil Procedure
Rule 23(b)(3) was not satisfied. The court reasoned that because the class included
borrowers who, like the Sellerses, vacated their homes, as well as borrowers who
remained in their homes, certifying the proposed class would require
individualized inquiries “for every class member to determine whether the § 524(j)
exception applied, and if so, whether the Bankruptcy Code precluded and/or
preempted the FDCPA and FCCPA.” Doc. 62 at 8-9. Just as it did in its summary
judgment order, the district court considered the preclusion/preemption defense to
be relevant only for class members who remained in their homes, meaning that
§ 524(j) dictated how and when Rushmore could contact them.
11
Case: 18-11420 Date Filed: 10/29/2019 Page: 12 of 28
After the district court denied class certification, the Sellerses received
permission from this Court to bring an interlocutory appeal of the order denying
class certification. See Fed. R. Civ. P. 23(f).
III. STANDARD OF REVIEW
We review a district court’s ruling on class certification for abuse of
discretion. Hines v. Widnall, 334 F.3d 1253, 1255 (11th Cir. 2003). “We will only
find an abuse of discretion if the [d]istrict [c]ourt applies the wrong legal standard,
follows improper procedures in making its determination, bases its decision on
clearly erroneous findings of fact, or applies the law in an unreasonable or
incorrect manner.” Local 703, I.B. of T. Grocery & Food Emps. Welfare Fund v.
Regions Fin. Corp., 762 F.3d 1248, 1253 (11th Cir. 2014). But “[a]s long as the
district court’s reasoning stays within the parameters of Rule 23’s requirements for
certification of a class, the district court decision will not be disturbed.” Hines,
334 F.3d at 1255.
IV. LEGAL ANALYSIS
The Sellerses argue that the district court abused its discretion when it
denied class certification on the basis that individual issues predominated. At the
first step of the predominance analysis, the district court classified various issues as
raising common or individualized questions. At the second step, the district court
concluded that given the individualized issues in the case, common issues did not
12
Case: 18-11420 Date Filed: 10/29/2019 Page: 13 of 28
predominate. We conclude that the district court abused its discretion because at
the first step of the predominance analysis it erroneously classified the question of
whether the Bankruptcy Code precluded or preempted the FDCPA and FCCPA
claims as raising an individual, rather than common, issue. Given this error,
remand is required so that the district court may reassess predominance in light of
the classification of this question as raising a common issue.
A. A District Court May Certify a Class Under Rule 23(b)(3) Only if
Common Questions of Law or Fact Predominate.
Before explaining why the district court abused its discretion in determining
that common questions predominate, we briefly review the standard for deciding
whether common issues predominate in a class action. A class action “may only
be certified if the trial court is satisfied, after a rigorous analysis, that the
prerequisites of Rule 23(a) have been satisfied.” Gen. Tel. Co. of Sw. v. Falcon,
457 U.S. 147, 161 (1982). “For a district court to certify a class action, the named
plaintiffs must have standing, and the putative class must meet each of the
requirements specified in Federal Rule of Civil Procedure 23(a), as well as at least
one of the requirements set forth in Rule 23(b).” Klay v. Humana, Inc., 382 F.3d
1241, 1250 (11th Cir. 2004) (footnote omitted), abrogated in part on other
grounds by Bridge v. Phoenix Bond & Indem. Co., 553 U.S. 639 (2008).
As an initial matter, a plaintiff seeking to represent a proposed class must
demonstrate that the class is “adequately defined and clearly ascertainable.” Little
13
Case: 18-11420 Date Filed: 10/29/2019 Page: 14 of 28
v. T-Mobile USA, Inc., 691 F.3d 1302, 1304 (11th Cir. 2012). If the proposed class
is adequately defined and clearly ascertainable, the class representative must then
satisfy Rule 23(a) by demonstrating (1) the class is so numerous that joinder of all
members is impracticable; (2) there are questions of law or fact common to the
class; (3) the claims or defenses of the representative parties are typical of the
claims or defenses of the class; and (4) the representative parties will fairly and
adequately protect the interests of the class. Id.; see Fed. R. Civ. P. 23(a). These
four requirements are commonly referred to as numerosity, commonality,
typicality, and adequacy of representation, respectively. Little, 691 F.3d at 1304.
In addition to meeting these requirements, the plaintiff must show that the
proposed class satisfies at least one of the class types under Rule 23(b). Id. The
Sellerses sought class certification under Rule 23(b)(3), which requires that “the
questions of law or fact common to class members predominate over any questions
affecting only individual members, and that a class action is superior to other
available methods for fairly and efficiently adjudicating the controversy.” Fed. R.
Civ. P. 23(b)(3).
Rule 23(b)(3)’s predominance requirement is far more demanding than Rule
23(a)’s commonality requirement. Amchem Prods., Inc. v. Windsor, 521 U.S. 591,
623-24 (1997). For the commonality requirement, “even a single common
question will do.” Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338, 359 (2011)
14
Case: 18-11420 Date Filed: 10/29/2019 Page: 15 of 28
(internal quotation marks omitted). But Rule 23(b)(3) requires us to consider
whether “the issues in the class action that are subject to generalized proof and thus
applicable to the class as a whole, . . . predominate over those issues that are
subject only to individualized proof.” Kerr v. City of West Palm Beach, 875 F.2d
1546, 1557-58 (11th Cir. 1989) (internal quotation marks omitted).
To determine whether common issues predominate, a district court first must
“identify the parties’ claims and defenses and their elements” and “then classify
these issues as common questions or individual questions by predicting how the
parties will prove them at trial.” Brown v. Electrolux Home Prods., Inc., 817 F.3d
1225, 1234 (11th Cir. 2016). “Common questions are ones where the same
evidence will suffice for each member, and individual questions are ones where the
evidence will vary from member to member.” Id. (internal quotation marks
omitted). The court then must “determine whether the common questions
predominate over the individual ones.” Id. at 1234-35. We have explained that
certification is inappropriate when “after adjudication of the classwide issues,
plaintiffs must still introduce a great deal of individualized proof or argue a
number of individualized legal points to establish most or all of the elements of
their individualized claims.” Klay, 382 F.3d at 1255.
15
Case: 18-11420 Date Filed: 10/29/2019 Page: 16 of 28
B. The District Court Abused Its Discretion in Its Class Certification
Analysis Regarding the FDCPA Claim.
We now turn to the primary question on appeal: whether the district court
abused its discretion in deciding that common issues did not predominate for the
FDCPA claim. In the predominance inquiry, the district court identified several
questions that raised individualized issues, including: (1) “whether the § 524(j)
exception applied,” and (2) if it did, “whether the Bankruptcy Code precluded
and/or preempted the FDCPA.” Doc. 62 at 9. The district court then concluded
that common questions did not predominate. But the district court erred in treating
the question of “whether the Bankruptcy Code precluded and/or preempted the
FDCPA” as an individualized question that was relevant only to class members
who remained in their homes. Because Rushmore’s defense potentially barred
every class member’s FDCPA claim, the district court was required to treat the
defense as raising a common issue.
To understand why the defense raised a question common to all class
members, we must begin by considering how the Bankruptcy Code relates to the
FDCPA claim. The FDCPA bars a debt collector from making “any false,
deceptive, or misleading representation . . . in connection with the collection of any
debt,” which includes making a false representation about “the character, amount,
or legal status of any debt.” 15 U.S.C. § 1692e(2)(A). The Sellerses alleged that,
for each class member, Rushmore engaged in false or deceptive conduct when it
16
Case: 18-11420 Date Filed: 10/29/2019 Page: 17 of 28
tried to collect a mortgage debt that had been discharged. Under the Sellerses’
theory, the monthly mortgage statements Rushmore sent to each class member
contained false statements because in each statement Rushmore asserted that the
class member was personally liable for a debt that the bankruptcy court’s discharge
injunction prohibited Rushmore from collecting. See Randolph v. IMBS, Inc.,
368 F.3d 726, 728 (7th Cir. 2004) (“A demand for immediate payment . . . after the
debt’s discharge[] is ‘false’ in the sense that it asserts that money is due, although,
because of . . . the discharge injunction (11 U.S.C. § 524), it is not.”).
Throughout the case, Rushmore has argued that it could not be liable
because the class’s FDCPA claims were “displaced and/or precluded by the
Bankruptcy Code.” Doc. 12 at 29. We understand Rushmore to be arguing that
the Bankruptcy Code provides the only remedy for a claim that a creditor violated
a bankruptcy court’s discharge injunction and thus bars an FDCPA claim resting
on the creditor’s attempt to collect a debt in violation of a bankruptcy court’s
discharge injunction. 5 More specifically, Rushmore argued that a debtor’s only
5
Rushmore has not been very precise in explaining the basis for its preclusion/
preemption defense. We construe Rushmore’s argument as we do because in raising the defense,
Rushmore relied on Prindle v. Carrington Mortgage Services, LLC, No. 3:13-cv-1349, 2016 WL
4369424 (M.D. Fla. Aug. 16, 2016). In Prindle, a debtor sued her mortgage servicer for
violating the FDCPA and FCCPA because it sent statements and took actions to collect her
mortgage debt after she received a Chapter 7 discharge. The district court in Prindle
acknowledged that there was a potential preclusion issue if the plaintiff’s claims were premised
on a violation of the discharge injunction. See Transcript at 8-9, Prindle, No. 3:13-cv-1349.
Based on its reliance on Prindle, we understand Rushmore’s argument about preclusion and
preemption to be that even if Rushmore engaged in false or deceptive conduct by sending
17
Case: 18-11420 Date Filed: 10/29/2019 Page: 18 of 28
recourse was to reopen his bankruptcy proceedings and ask the bankruptcy court to
hold the creditor in civil contempt for violating the discharge injunction. See In re
McLean, 794 F.3d 1313, 1318-19 (11th Cir. 2015) (recognizing that bankruptcy
court had authority to hold creditor in contempt for violating discharge
injunction).6
The district court concluded that Rushmore’s preclusion and/or preemption
defense raised an individualized issue because it applied only to those class
members who stayed in their homes post-bankruptcy. We disagree. The district
court erred because the legal question of whether the Bankruptcy Code precludes
or displaces any remedy available under the FDCPA and FCCPA for a claim that a
creditor engaged in false or deceptive conduct by trying to collect a debt in
violation of a discharge injunction is common to all class members.
monthly mortgage statements in violation of a bankruptcy court’s discharge injunction, a class
member’s only remedy was to bring a contempt action under the Bankruptcy Code.
We acknowledge that Rushmore’s preclusion/preemption defense arguably could be
construed as raising an argument that it cannot be liable because its conduct was permitted under
the Bankruptcy Code, and thus it did not violate any discharge orders when it sent the statements.
But the district court treated this as a distinct issue when it identified “whether the § 524(j)
exception applied” as a separate question. Doc. 62 at 8-9.
6
A bankruptcy court could hold Rushmore in contempt for violating the discharge
injunction if it determined that (1) Rushmore’s communication was prohibited under § 524 and
(2) there was “no fair ground of doubt as to whether the [discharge] order barred [its] conduct.
In re Roth, 935 F.3d 1270, 1276 (11th Cir. 2019). To determine whether a creditor violated
§ 524 for purposes of contempt proceedings, the bankruptcy court would apply an objective
standard, not the FDCPA’s “least sophisticated consumer” standard. Id. at 1276-77.
18
Case: 18-11420 Date Filed: 10/29/2019 Page: 19 of 28
In their complaint, the Sellerses alleged that Rushmore sent monthly
mortgage statements to collect debts that “had been discharged by bankruptcy
proceedings and were no longer due and owing.” Doc. 1 at ¶ 45. By representing
that it had a “legal right to collect upon discharged monetary amounts,” the
Sellerses alleged, Rushmore had made “false, deceptive, or misleading
representations in connection with the collection of a debt.” Id. at ¶ 46. The class
that the Sellerses identified included members who vacated their homes, for whom
§ 524(a) defined the scope of the bankruptcy court’s discharge injunction, and
class members who remained in their homes, for whom § 524(j) defined the scope
of the bankruptcy court’s discharge injunction. The district court decided that
Rushmore’s preemption/preclusion defense applied only to class members who
remained in their homes. In reaching this decision, the court overlooked the
Sellerses’ allegations that Rushmore violated discharge injunctions even when it
sent form Mortgage Statements I and II to class members who vacated their homes
because § 524(a) provides that a bankruptcy court’s discharge order operates as an
injunction that bars any act to collect a discharged debt as a personal liability of the
debtor. See 11 U.S.C. § 524(a)(2). Accordingly, Rushmore’s argument—that it is
not liable under the FDCPA because the only remedy for violation of a discharge
injunction is under the Bankruptcy Code—applies to all class members.
19
Case: 18-11420 Date Filed: 10/29/2019 Page: 20 of 28
Given the district court’s error, we must vacate its class certification
decision and remand. Our precedent establishes that a district court abuses its
discretion when in assessing predominance it improperly categorizes a question as
presenting a common or an individual issue. See Brown, 817 F.3d at 1235-38. In
Brown, consumers purchased front-loading washing machines that were designed
in a way that caused mildew to grow inside the machine. Id. at 1230-31. The
consumers brought a putative class action against the manufacturer alleging state
law claims for unfair competition based on the manufacturer’s failure to disclose
the design defect. Id. at 1231. The district court certified a class, determining that
common questions of law and fact predominated. Id. at 1232. We vacated the
class certification order on the basis that the district court abused its discretion
when it erroneously classified questions as presenting common, rather than
individualized, issues. Id. at 1236-37. Consistent with Brown, we remand so that
the district court may decide in the first instance whether, in light of our holding
that the preemption/preemption defense raises a common question, common issues
predominate.
We caution that we express no opinion today about whether Rushmore’s
defense is meritorious—that is, whether the Bankruptcy Code actually precludes or
displaces any remedy available under the FDCPA and FCCPA. We have not
previously addressed this question, which has split the circuits. Compare Walls v.
20
Case: 18-11420 Date Filed: 10/29/2019 Page: 21 of 28
Wells Fargo Bank, N.A., 276 F.3d 502, 511 (9th Cir. 2002) (“Because [the
debtor’s] remedy for violation of § 524 no matter how cast lies in the Bankruptcy
Code, her simultaneous FDCPA claim is precluded.”), with Garfield v. Ocwen
Loan Servicing, LLC, 811 F.3d 86, 91 (2d Cir. 2016) (“[W]e conclude that the
Bankruptcy Code does not broadly repeal the FDCPA for purposes of FDCPA
claims based on conduct that would constitute alleged violations of the discharge
injunction.”), and Randolph, 368 F.3d at 732-33 (holding that the Bankruptcy
Code “cannot be deemed to have repealed or curtailed [the FDCPA] by
implication”). Our decision today is limited to the conclusion that this defense
raises questions common to all class members.
We note the existence of a separate issue in this case: whether Rushmore
actually violated the discharge injunction when it sent the statements. We cannot
say that the district court erred in classifying this question as an individual issue
because the district court would have to apply different legal criteria to determine
whether Rushmore violated the discharge injunction depending on whether the
class member had vacated or remained in her home. If a class member vacated her
home, the district court would look to § 524(a) to determine whether Rushmore’s
act of sending a mortgage statement violated the discharge injunction. But if a
class member remained in her home, the district court would look to § 524(j) to
21
Case: 18-11420 Date Filed: 10/29/2019 Page: 22 of 28
answer the same question.7 In assessing predominance on remand, the district
court will need to consider the Sellerses’ contention that even though the legal
standards under § 524(a) and 524(j) are different, common questions predominate
because the district court would use the exact same evidence—form Mortgage
Statement I and form Mortgage Statement II—to determine for each group whether
Rushmore violated the discharge injunction. If the Sellerses are correct, this may
suggest that common questions predominate. See Klay, 382 F.3d at 1255
(explaining that if “the addition of more plaintiffs leaves the quantum of evidence
introduced by the plaintiffs as a whole relatively undisturbed, then common issues
are likely to predominate”).8
7
In an alternative argument, the Sellerses contend that this question presents a common
issue because our prior precedent prohibits a debtor from remaining in her home and making
payments in lieu of foreclosure. See In re Taylor, 3 F.3d 1512, 1516 (11th Cir. 1993) (explaining
that “[n]othing in the plain language of [the Bankruptcy Code] provides a debtor with an option
to retain the property and to continue to make payments”). The Sellerses argue that because
under Taylor no class member was permitted to remain in her home and make monthly
payments, Rushmore could not rely on § 524(j) and seek payments in lieu of foreclosure from
any class member. But Taylor was decided before Congress amended the Bankruptcy Code to
add § 524(j), which expressly contemplates that a debtor could stay in her principal residence
and avoid foreclosure by making periodic payments on the mortgage. See Bankruptcy Abuse
Prevention and Consumer Protection Act of 2005, Pub. L. No. 109-8, tit. II, § 202, 119 Stat. 23,
43 (2005). Given the addition of § 524(j), we are no longer bound by Taylor, at least with
respect to property that is a debtor’s principal residence. See Sassy Doll Creations, Inc. v.
Watkins Motor Lines, Inc., 331 F.3d 834, 840 (11th Cir. 2003) (recognizing that we are not
bound by the prior precedent rule when there is a “clear change in the law by Congress” (internal
quotation marks omitted)).
8
Rushmore urges us to affirm the district court’s denial of class certification on the
alternative grounds that the typicality and ascertainability requirements for class certification are
not satisfied. But the district court addressed only predominance and did not pass on these other
class-certification requirements. Given the district court’s broad discretion in deciding whether
to certify a class, the appropriate course is to allow the district court an opportunity to address
these issues in the first instance. See Smith v. Casey, 741 F.3d 1236, 1243 n.7 (11th Cir. 2014)
22
Case: 18-11420 Date Filed: 10/29/2019 Page: 23 of 28
C. The District Court Also Abused Its Discretion in Its Class Certification
Analysis Regarding the FCCPA Claim.
We now turn to whether the district court abused its discretion when it
denied class certification with respect to the FCCPA claim. To establish that
Rushmore violated the FCCPA, the Sellerses must prove that Rushmore attempted
to enforce a debt that it knew was not legitimate. See Fla. Stat. § 559.72(9). Just
as with the FDCPA claim, each class member’s FCCPA claim is premised on the
allegation that the mortgage debt was not legitimate because the bankruptcy court
had discharged the debtor’s personal liability. Rushmore raised the same defense
that each class member’s FCCPA claim was preempted or precluded by the
Bankruptcy Code. For the same reasons we discussed in the previous section, we
conclude that the district court abused its discretion in categorizing this defense as
raising an individualized, as opposed to common, issue. We likewise vacate the
district court’s order denying class certification on the FCCPA claim.
On remand, the district court may consider whether any other elements or
defenses related to the FCCPA claim raise individualized questions, including
whether Rushmore had actual knowledge that the debts were not legitimate. See
Fla. Stat. § 559.72(9). “In contrast to the FDCPA, Section 559.72(9) of the
(“With respect to a decision we would review only for an abuse of discretion, we generally
decline to substitute our judgment about the matter when the district court has not yet decided it
and leave the decision for the district court to make in the first instance.”).
23
Case: 18-11420 Date Filed: 10/29/2019 Page: 24 of 28
FCCPA requires a plaintiff to demonstrate that the debt collector defendant
possessed actual knowledge that the threatened means of enforcing the debt was
unavailable.” LeBlanc v. Unifund CCR Partners, 601 F.3d 1185, 1192 n.12 (11th
Cir. 2010). If the district court concludes that the question of actual knowledge
requires an individualized inquiry,9 this conclusion may factor into its analysis of
whether common questions predominate.
V. CONCLUSION
We vacate the district court’s order denying class certification so that the
district court may reconsider whether common questions of law or fact
predominate given that the question of whether the “Bankruptcy Code precluded
and/or preempted the FDCPA and FCCPA” raises a common, rather than an
individualized, legal issue.
VACATED AND REMANDED.
9
We do not mean to suggest that the district court on remand must conclude that this
question presents an individualized inquiry. See Belcher v. Ocwen Loan Servicing, LLC, No.
8:16-cv-690, 2018 WL 1701963, at *13 (M.D. Fla. Mar. 9, 2018) (explaining that a consent
judgment entered into by loan servicer could establish actual knowledge for all potential class
members). But it appears that the Sellerses have not yet identified a mechanism for determining
actual knowledge on a classwide basis.
24
Case: 18-11420 Date Filed: 10/29/2019 Page: 25 of 28
EXHIBIT A
25
Case: 18-11420 Date Filed: 10/29/2019 Page: 26 of 28
EXHIBIT B
26
Case: 18-11420 Date Filed: 10/29/2019 Page: 27 of 28
27
Case: 18-11420 Date Filed: 10/29/2019 Page: 28 of 28
THAPAR, Circuit Judge, concurring:
I join Judge Pryor’s thoughtful opinion on the understanding that it decides a
narrow issue. The district court held that the proposed class failed Rule 23(b)(3)’s
predominance requirement because it reasoned that the preclusion and preemption
defenses raised an individual (rather than common) question about the class. But as
the majority opinion explains, these defenses could apply to class members who
remained in their homes as well as to class members who left their homes. Cf. Walls
v. Wells Fargo Bank, N.A., 276 F.3d 502, 510–11 (9th Cir. 2002); Pertuso v. Ford
Motor Credit Co., 233 F.3d 417, 425–26 (6th Cir. 2000). So these defenses do raise
a common question about the class.
Of course, the parties have thoroughly briefed the predominance question on
appeal. So it might seem tempting for us to resolve the broader issue here and now.
(Particularly given the many other individual questions apparently raised by the
class.) But Rule 23 vests the district court—not this court—with broad discretion
over the certification decision. See Califano v. Yamasaki, 442 U.S. 682, 703 (1979).
And we may not substitute our judgment simply out of a desire to promote judicial
economy. See McKusick v. City of Melbourne, 96 F.3d 478, 489 n.7 (11th Cir. 1996).
Instead, as the majority opinion rightly notes, the district court should have the
chance to address the issue in first instance.
28