United States Court of Appeals

For the Eighth Circuit

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No. 13-2831

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Laura Powers, et al.

lllllllllllllllllllll Plaintiffs - Appellees

v.

Credit Management Services, Inc., et al.

lllllllllllllllllllll Defendants - Appellants

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 Appeal from United States District Court 

for the District of Nebraska - Omaha

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 Submitted: September 8, 2014

 Filed: January 13, 2015 

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Before WOLLMAN, LOKEN, and MURPHY, Circuit Judges.

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LOKEN, Circuit Judge.

This is an interlocutory appeal of a district court order certifying four classes

of Nebraska consumers, an appeal authorized by Rule 23(f) of the Federal Rules of

Civil Procedure. Credit Management Services, Inc. (CMS) is a Nebraska corporation

engaged in collecting consumer debts assigned to CMS by the original creditor (or by

a prior assignee). CMS is a “debt collector” subject to the provisions of the federal

Fair Debt Collection Practices Act (FDCPA). See 15 U.S.C. § 1692a(6). 
The record reflects that CMS commences consumer debt collection actions in

Nebraska state courts by filing standard-form complaints. The complaints allege, inter

alia, that “more than 90 days have elapsed since the presentation of this claim” to the

consumer and seek prejudgment interest “pursuant to” Neb. Rev. Stat. § 25-1801 or

§ 45-104, and attorney fees “as allowable by law.” When named plaintiffs Laura

Powers and Nichole and Jason Palmer contested CMS’s state court collection

complaints (Exhibits A and C to plaintiffs’ First Amended Complaint), CMS served

nearly identical discovery requests seeking disclosure of detailed employment and

financial information, including their rates of compensation and copies of their recent

tax returns (Exhibits B and D). 

Plaintiffs filed this putative class action against CMS and four in-house CMS

attorneys customarily listed in the signature boxes of the standard-form collection

complaints and discovery requests. Plaintiffs allege that CMS’s standard-form

pleadings violate various provisions of the FDCPA, making them unfair or deceptive

acts or practices that also violate the Nebraska Consumer Protection Act (NCPA),

Neb. Rev. Stat. § 59-1602. In certifying four classes, the district court agreed with

plaintiffs that the predominant common question is whether the defendants sent each

class member standard collection complaints and discovery requests, which violate

the FDCPA and NCPA. Powers v. Credit Mgmt. Servs., Inc., No. 8:11CV436, 2013

WL 3716412, at *5 (D. Neb. July 12, 2013). The four classes consist of persons who

received a county court collection complaint or discovery requests seeking to collect

a debt “for personal, family, or household purposes,” or had such a collection action

pending, during the applicable one-year (FDCPA) and four-year (NCPA) limitations

periods. We granted CMS leave to appeal and now reverse, concluding that the

district court abused its discretion by failing to conduct the “rigorous analysis . . . of

what the parties must prove” that Rule 23 requires. Elizabeth M. v. Montenez, 458

F.3d 779, 786 (8th Cir. 2006), citing Amchem Prods, Inc. v. Windsor, 521 U.S. 591,

622-23 (1997); see also Wal-Mart Stores, Inc. v. Dukes, 131 S. Ct. 2541, 2551 (2011).

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I. Framing the Issues

Rule 23(a) provides that no class action may be certified unless the court

determines:

(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.

If these requirements are met, the court must find that the class can be certified under

one of the Rule 23(b) categories. Here, the district court certified the classes under

Rule 23(b)(3), which requires finding “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.”

The required “preliminary inquiry of the class certification stage may require

the court to resolve disputes going to the factual setting of the case, and such disputes

may overlap the merits of the case.” Luiken v. Domino’s Pizza, LLC, 705 F.3d 370,

372 (8th Cir. 2013) (quotation omitted). Here, the four classes comprise thousands

of Nebraska consumers sued by CMS in state courts using standard-form complaints

and discovery requests. Obviously, the nature of the underlying consumer debts, the

relief sought by CMS in state court, and the outcome of the many state court suits

varied substantially. Thus, class certification was appropriate only if, as plaintiffs

alleged, CMS’s standard-form complaints and discovery requests, on their face,

violated the FDCPA and therefore the NCPA. Though cross motions for summary

judgment were pending when the district court ruled, the court granted class

certification without ruling on those motions. The court concluded that the “main

issue” establishing commonality, typicality, and predominance is “whether CMS’s

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complaints in the form of Exhibits A & C and discovery requests in the form of

Exhibits B & D violate the FDCPA and/or NCPA.” Powers, 2013 WL 3716412, at

*4, *7. The court did not conduct a “rigorous analysis” of what plaintiffs must prove

to prevail on their facial invalidity theories. Our task, then, is to fill this void, which

requires separate analyses of the legal theories attacking the standard-form complaints

and discovery requests. 

In conducting this analysis, we bear in mind an important distinction. Run-ofthe-mill certified FDCPA class actions have involved standard-form collection letters

sent directly to consumers before the filing of collection lawsuits. See, e.g., Evans v.

Am. Credit Sys., Inc., 222 F.R.D. 388, 394 (D. Neb. 2004), on which the district court

relied. But in this case, plaintiffs challenge standard-form pleadings used by a debt

collector in collection lawsuits it actually filed. In Heintz v. Jenkins, 514 U.S. 291,

299 (1995), the Supreme Court held that a 1986 amendment applied the FDCPA’s

substantive prohibitions to litigation activities of attorneys who regularly engage in

consumer debt collection. However, the Court noted “the statute’s apparent objective

of preserving creditors’ judicial remedies.” Id. at 296. The Act’s “conduct-regulating

provisions,” the Court later cautioned, “should not be assumed to compel absurd

results when applied to debt collecting attorneys.” Jerman v. Carlisle, McNellie, Rini,

Kramer & Ulrich, 559 U.S. 573, 600 (2010). It is a matter of common knowledge in

the legal community that standard form pleadings are routinely used by cost-conscious

attorneys in all types of litigation.

We recently surveyed the complex question of FDCPA liability for litigation

activities in a non-class action, concluding that a debt collector’s fact allegations in

a state court pleading are not false and misleading for purposes of § 1692e simply

because they were “rejected as not adequately supported in the collection suit.” 

Hemmingsen v. Messerli & Kramer, P.A., 674 F.3d 814, 819 (8th Cir. 2012). In the

class certification context, these complexities -- ignored by plaintiffs and not

addressed by the district court -- are highly relevant to a rigorous analysis of the well-

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traveled Rule 23 inquiries into commonality, typicality, adequate representation of the

class, predominance, and superiority. See Jenkins v. Gen. Collection Co., No.

8:06CV743, 2008 WL 4104677, at *11-13 (D. Neb. Aug. 28, 2008).

II. The Standard-Form Complaint Classes

CMS served named plaintiff Powers a state court collection complaint (Exhibit

A) alleging she owed $454.00 for goods and services provided by “GIKK Ortho

Specialists.” The complaint sought prejudgment interest “pursuant to Sec. 45-104.” 

CMS served the Palmer named plaintiffs a collection complaint (Exhibit C) alleging

they owed $856.38 for goods and services provided by “OB/GYN physicians.” The

complaint sought prejudgment interest “pursuant to Sec. 25-1801.” Both complaints

sought “the costs of this action, prejudgment interest, attorney’s fees if applicable, and

post-judgment interest as allowed by law.” The FDCPA prohibits a debt collector

from attempting to collect any amount, including interest on the principal obligation,

“unless such amount is expressly . . . permitted by law.” 15 U.S.C. § 1692f(1). 

Plaintiffs claim Exhibits A and C were facially invalid because they sought

prejudgment interest not permitted by the cited Nebraska statutes. 

The § 45-104 Subclass. Section 45-104 allows an award of prejudgment

interest at the statutory rate “on money due on any instrument in writing, or on

settlement of the account from the day the balance shall be agreed upon.” Plaintiffs

allege that CMS’s standard-form allegations that interest may be awarded under this

statute violate FDCPA § 1692f(1) because § 45-104 does not apply if the consumer

contests the collection lawsuit, in which case CMS has an unliquidated claim and

prejudgment interest may not be recovered unless additional requirements are met

under § 45-103.02.

Rule 23(a)(2) requires plaintiffs to show there are questions of law or fact

common to the four classes. Commonality requires a showing that class members

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“have suffered the same injury.” Gen. Tel. Co. v. Falcon, 457 U.S. 147, 157 (1982). 

The issue as framed by plaintiffs seems to present an unresolved common question of

law in applying § 45-104. However, “[w]hat matters to class certification . . . is not

the raising of common ‘questions’ -- even in droves -- but, rather the capacity of a

classwide proceeding to generate common answers apt to drive the resolution of the

litigation.” Dukes, 131 S. Ct. at 2551 (quotation omitted; emphasis in original). 

If plaintiffs’ interpretation of § 45-104 is wrong, then the FDCPA and NCPA

named plaintiffs lose on this theory attacking the standard-form complaints, and

prompt resolution of the summary judgment cross motions would have obviated the

need for class certification of these claims.1

 On the other hand, if plaintiffs’ state law

theory is correct, many individualized inquiries are required to resolve class members’

claims. Our decision in Hemmingsen established that, to recover under FDCPA

§ 1692f, a class member must prove that CMS’s prayer for an award of interest in the

state court collection suit was “unfair or unconscionable,” not merely unsuccessful. 

Therefore, to resolve this theory of liability, the records pertaining to every state court

collection suit must be reviewed to determine: (i) whether CMS claimed prejudgment

interest under § 45-104 (as in the Powers complaint, but not in the Palmer complaint);

(ii) if claimed, did CMS recover prejudgment interest under § 45-104, making the

alleged violation of FDCPA § 1692f(1) material, see Hahn v. Triumph P’ships LLC,

557 F.3d 755, 757-58 (7th Cir. 2009); (iii) for every potentially material violation,

whether the underlying consumer transaction reflects that CMS had a legitimate claim

1

Although a district court must determine whether to certify a class at “an early

practicable time” in the litigation, Rule 23(c)(1)(A), it is not uncommon for a district

court to rule on a summary judgment motion that will clarify or simplify the litigation

prior to ruling on class certification. See Hartley v. Suburban Radiologic Consultants,

Ltd., 295 F.R.D. 357, 367-68 (D. Minn. 2013); Jenkins v. General Collection Co., 538

F. Supp. 2d 1165 (D. Neb. 2008). 

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under § 45-104;2

 (iv) whether plaintiffs’ legal theory was litigated by the class

member and resolved by the state court for issue preclusion purposes, see generally

Taylor v. Sturgell, 553 U.S. 880, 891-93 (2008).3

The district court also failed to address a legal question whose resolution may

depend on the facts of a particular class member’s claim -- whether the affirmative

defense in 15 U.S.C. § 1692k(c) applies to FDCPA violations caused by the debt

collector’s misinterpretation of what is “permitted by” state law, a question the

Supreme Court declined to decide in Jerman, 559 U.S. at 579-81 n.4. See Johnson v.

Riddle, 305 F.3d 1107, 1121-24 (10th Cir. 2002). 

2

Under § 45-104, a claim is liquidated if “‘no reasonable controversy exists as

to either plaintiff’s right to recovery or as to the amount of such recovery.’ The mere

contesting of the amount of or right to recovery does not alone create a reasonable

controversy.” Lincoln Benefit Life Co. v. Edwards, 243 F.3d 457, 462 (8th Cir.

2001), quoting Lange Indus. v. Hallam Grain Co., 507 N.W.2d 465, 477 (Neb. 1993). 

3

The district court concluded that the underlying state court judgments were

irrelevant to class certification because “plaintiffs are contesting the defendants’

collection practices and not whether debt was owed.” Powers v. Credit Mgmt. Servs.,

Inc., No. 8:11CV436, 2013 WL 1189114, at *11 (D. Neb. Mar. 14, 2013). We

disagree. “When an issue of fact or law is actually litigated and determined by a valid

and final judgment, and the determination is essential to the judgment, the

determination is conclusive in a subsequent action between the parties, whether on the

same or a different claim.” Restatement (Second) of Judgments § 27 (emphasis

added); see also Chicago, R.I. & P. Ry. v. Schendel, 270 U.S. 611, 616-17 (1926);

Bell v. Sellevold, 713 F.2d 1396, 1404 (8th Cir. 1983). Because plaintiffs challenge

CMS’s use of a standard-form pleading, CMS is not liable under the FDCPA to any

class member who unsuccessfully litigated this issue in state court. For class members

whose state court collection suits are pending, a federal court has jurisdiction over

overlapping FDCPA claims, but “it would be proper for the district court to stay

proceedings and direct that [plaintiffs] proceed to file their action as a permissive

counterclaim in state court.” Peterson v. United Accounts, Inc., 638 F.2d 1134, 1137

(8th Cir. 1981). Thus, issue preclusion principles fatally undermine the district court’s

analysis of commonality and predominance. 

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Finally, the district court erred in ruling that plaintiffs’ separate claims against

the in-house collection attorneys did not affect class certification because “the

question of individual defendant liability should be addressed at a later stage in the

proceedings.” Powers, 2013 WL 3716412, at *5. The issue is more complex. The

record reflects that (i) one in-house attorney signed the standard-form pleadings above

a signature box showing all four, and (ii) these debt-ridden young lawyers have a

negative or very small net worth. Each class member may have a stronger claim

against the individual attorney who signed the pleadings in that consumer’s collection

lawsuit. Because total damages are capped in an FDCPA class action,4

 a smaller class

limited to collection suits in which an individual defendant participated would hold

out the prospect of higher recoveries for those with the strongest claims. See

Crawford v. Equifax Payment Servs. Inc., 201 F.3d 877, 882 (7th Cir. 2000). Thus,

by alleging that impecunious individual defendants are jointly and severally liable to

all members of the largest possible classes, plaintiffs created an issue of class action

superiority that cannot be ignored at the certification stage.5

 

The § 25-1801 Subclass. Section 25-1801 provides that any person may

present a claim for less than $2000 and, “at the expiration of ninety days after the

presentation of such claim,” may sue on the claim and recover interest at the statutory

4

The FDCPA caps statutory damages in a class action at the lesser of $500,000

or one per cent of the debt collector’s the net worth. 15 U.S.C. § 1692k(a)(2)(B)(ii). 

An individual plaintiff, on the other hand, can recover up to $1,000 in statutory

damages, plus attorneys’ fees and costs. § 1692(k)(a)(2)(A) and (a)(3). The NCPA

allows statutory damages for each class member up to $1,000, with no apparent cap

for class actions. Neb. Rev. Stat. § 59-1609.

5

There is irony here, indeed injustice, that should not go unnoticed. Plaintiffs’

experienced class action attorneys assert aggressive theories restricting the application

of Nebraska prejudgment interest statutes in seeking to impose potentially mammoth

FDCPA damage liability on young attorneys who filed standard-form pleadings

seeking awards of interest to which CMS might not be entitled. 

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rate “from the date of presentation.” Plaintiffs allege that CMS’s standard-form

complaints violate FDCPA § 1692f(1) because CMS alleges that “more than 90 days

have elapsed since the presentation of this claim,” when in fact CMS does not present

the claim but relies on the original creditor’s billing statement, and therefore recovery

of prejudgment interest is not “permitted by” § 25-1801. 

Again, the issue as framed appears to present a common question of law --

whether § 25-1801 requires that an assignee of the original creditor must personally

present the claim at least ninety days before commencing a collection suit. The text

of the Nebraska statute does not explicitly resolve the question. A prompt grant of

defendants’ summary judgment motion would have resolved this portion of the named

plaintiffs’ claims, no doubt obviating the need for class certification. But again, even

if plaintiffs’ state law theory is correct, individualized inquiries are required. Even

though every standard-form complaint apparently included the ninety-day allegation,

each class member’s state court collection suit must be examined to determine: (i) did

CMS seek prejudgment interest under § 25-1801, as it did in the Palmer complaint but

not in the Powers complaint; (ii) if so, did CMS personally provide the ninety-day

presentation, in which case CMS complied with plaintiffs’ interpretation of § 25-1801,

or did CMS rely on an assignor’s billing statement or demand for payment;6

 (iii) did

CMS recover prejudgment interest under § 25-1801, making the alleged FDCPA

violation material; and (iv) was plaintiffs’ legal theory litigated by the class member

and resolved by the state court for issue preclusion purposes. 

For these reasons, the standard-form complaint classes do not meet the

commonality, predominance, and superiority requirements of Rule 23.

6

CMS alleged that it usually relies on original billing statements, but “where

such a bill or demand is not sent, Defendants do personally present the claim.” 

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III. The Standard-Form Discovery Requests 

Plaintiffs’ First Amended Complaint alleged that CMS’s standard-form

discovery instructions “confuse and mislead the unsophisticated consumer as to his

or her rights in answering said discovery,” and that the requests demand “irrelevant

and highly personal financial information from the consumer.” In the underlying

collection suits, the named plaintiffs were represented by counsel who either prepared

and filed or reviewed and filed responses to CMS’s discovery requests. Thus, in

considering plaintiffs’ claims, the initial question is whether discovery requests sent

to a represented debtor during the course of litigation can violate the FDCPA.

In Hemmingsen, we noted, “circuit courts have struggled to define the extent

to which a debt collection lawyer’s representations to the consumer’s attorney or in

court filings during the course of debt collection litigation can violate §§ 1692d-f.” 

674 F.3d at 818. Most reported decisions involved collection complaints, which are

typically served on a consumer not yet represented by counsel and therefore can have

the same ability to mislead and confuse as pre-litigation collection letters. See, e.g.,

Donohue v. Quick Collect, Inc., 592 F.3d 1027, 1032 (9th Cir. 2010). Beyond those

cases, at least two circuits, applying Heintz v. Jenkins, have held that the FDCPA also

applies to discovery requests and procedures. See McCollough v. Johnson,

Rodenburg & Lauinger, LLC, 637 F.3d 939, 952 (9th Cir. 2011) (involving requests

to admit “facts that were not true” served on a pro se consumer); Sayyed v. Wolpoff

& Abramson, 485 F.3d 226, 235 (4th Cir. 2007) (reversing a Rule 12(b)(6)

dismissal).7

 Consistent with our decision in Hemmingsen, we decline to adopt an

inflexible rule that the FDCPA can never apply to discovery requests made directly

7

On remand the district court adopted the Seventh Circuit’s “competent lawyer”

standard and granted summary judgment dismissing the FDCPA claim because the

alleged errors in the debt collector’s interrogatories would have been “immediately

apparent to even the least competent member of the Maryland bar.” Sayyed v.

Wolpoff & Abramson, 733 F. Supp. 2d 635, 643 (D. Md. 2010). 

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to the consumer’s attorney during the course of debt collection litigation. But the

standard by which such claims should be evaluated is a different question. 

In granting class certification on plaintiffs’ discovery request claims, the district

court emphasized that FDCPA violations are assessed objectively through the eyes of

an unsophisticated consumer and therefore the fact that the named plaintiffs were

represented by attorneys was irrelevant to class certification. Powers, 2013 WL

3716412, at *5. We disagree. The unsophisticated consumer standard applies to

FDCPA claims challenging debt collection letters and other communications directly

to the consumer. See Peters v. Gen. Servs. Bureau., Inc., 277 F.3d 1051, 1055 (8th

Cir. 2002); Duffy v. Landberg, 215 F.3d 871, 874 (8th Cir. 2000). However, we agree

with other circuits that the unsophisticated consumer standard is “inappropriate for

judging communications with lawyers.” Evory v. RJM Acquisitions Funding, LLC,

505 F.3d 769, 774 (7th Cir. 2007), citing Dikeman v. Nat’l Educators, Inc., 81 F.3d

949, 953-54 (10th Cir. 1996). Rather, “a representation by a debt collector that would

be unlikely to deceive a competent lawyer, even if he is not a specialist in consumer

debt law, should not be actionable.” Evory, 505 F.3d at 775. As the Second Circuit

observed in a non-discovery context, “Where an attorney is interposed as an

intermediary between a debt collector and a consumer, we assume the attorney, rather

than the FDCPA, will protect the consumer from a debt collector’s fraudulent or

harassing behavior.” Kropelnicki v. Siegel, 290 F.3d 118, 128 (2d Cir. 1996); see also

Guerrero v. RJM Acquisitions LLC, 499 F.3d 926, 939 (9th Cir. 2007) (“Attorneys

possess exactly the degree of sophistication and legal wherewithal that individual

debtors do not.”). 

Applying the “competent lawyer” standard to discovery requests sent to a

represented debtor during the course of litigation, we conclude plaintiffs’ facial

invalidity claims do not meet the commonality and predominance requirements of

Rules 23(a) and 23(b)(3). In the typical debt collection case, a competent lawyer

served with the debt collector’s discovery requests does not need instructions as to the

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client’s “rights in answering,” and will object to requests that are irrelevant or demand

sensitive information. The competent lawyer brings a discovery dispute that cannot

be resolved informally to the court, which rules on fact-intensive questions of

reasonableness on an adequate record. As we observed in Hemmingsen, state court

judges presiding over collection suits have ample power to sanction a debt collector

and/or its lawyer for engaging in vexatious litigation tactics. “There is no need for

follow-on § 1692e litigation that increases the cost of resolving bona fide debtorcreditor disputes.” 674 F.3d at 820. Cf. Simmons v. Roundup Funding, LLC, 622

F.3d 93, 96 (2d Cir. 2010) (“There is no need to protect debtors who are already under

the protection of the bankruptcy court, and there is no need to supplement the

remedies afforded by bankruptcy itself.”) 

Nowhere in the lengthy district court opinions or in plaintiffs’ brief on appeal

do we find an analysis of how claims that standard-form discovery requests were

irrelevant and unreasonable can be adjudicated without either knowing the factual

context in which those requests were made in a particular case, or strong evidence of

a standard practice that the debt collector persistently abused. Under Rule 23’s

commonality and more demanding predominance requirements, we conclude that

class certification of these claims was improper. See Amchem, 521 U.S. at 624. 

The district court’s class certification order dated July 12, 2013 is reversed.

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