Randolph Sellers v. Rushmore Loan Management Services, LLC

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)
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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.

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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.

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§ 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.
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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.
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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.

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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.

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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.

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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

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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
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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.

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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

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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
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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)

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(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.

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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
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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
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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.
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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.

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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.

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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

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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)
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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.”).
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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.

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EXHIBIT A

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EXHIBIT B

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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.

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