Seventh Circuit Follows Several Consumer-Related Precedents to Reverse Cert Denial in an FDCPA Case

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The Seventh Circuit’s recent analysis in a fair debt collection opinion draws heavily from recent opinions in the consumer context and will likely have implications in future consumer cases too. See generally McMahon v. LVNV Funding LLC,– F.3d –, 2015 WL 8119786 (Dec. 8, 2015).

The case arises from allegations that defendants violated the FDCPA by sending out letters that sought to collect on debts for which the statute of limitations had already run. Plaintiff’s suit sought, among other relief, actual damages for those class members “who paid a part of the debt after receiving a … letter.” Id. at *2. The district court denied cert based on a finding that a number of individualized causation and damages issues would be presented: “even if ‘the amount of damages due each class member is “capable of ministerial determination,” causation, i.e., determining whether class members paid the debt because of the letter, out of moral compulsion, or for some other reason, is not.'” Id.

The Seventh Circuit disagreed. Following several of its recent consumer decisions, the court held that the certification denial was an abuse of discretion. The court noted that “[i]t is well established that, if a case requires determinations of individual issues of causation and damages, a court may ‘bifurcate the case into a liability phase and a damages phase.'” Id. at *3 (quoting Mullins v. Direct Digital LLC, 795 F.3d 654, 671 (7th Cir. 2015) and citing Butler v. Sears, Roebuck & Co., 727 F.3d 796, 800 (7th Cir.2013)). And the court held that it was an abuse of discretion for the district court to suggest that “the existence of individual issues of causation automatically bars class certification under Rule 23(b)(3).” Id. (quoting Pella Corp. v. Saltzman, 606 F.3d 391, 394 (7th Cir. 2010)) (“Although ‘proximate cause is necessarily an individual issue,’ we have explained that ‘the need for individual proof alone does not necessarily preclude class certification.'”).

This was the case’s second trip to the Seventh Circuit. McMahon I, 744 F.3d 1010, 1019 (2014).