           Case: 16-11975   Date Filed: 05/30/2017   Page: 1 of 11


                                                           [DO NOT PUBLISH]



             IN THE UNITED STATES COURT OF APPEALS

                     FOR THE ELEVENTH CIRCUIT
                       ________________________

                             No. 16-11975
                       ________________________

                  D.C. Docket No. 1:14-cv-00473-KD-M



RAYMUNDO LANDEROS,
DIANA LANDEROS,

                                               Plaintiffs - Appellants,

versus

PINNACLE RECOVERY, INC.,

                                               Defendant - Appellee.

                       ________________________

                Appeal from the United States District Court
                   for the Southern District of Alabama
                       ________________________

                              (May 30, 2017)

Before ED CARNES, Chief Judge, ROSENBAUM, and DUBINA, Circuit Judges.

PER CURIAM:
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      This is an interlocutory appeal. Raymundo Landeros and Diana Landeros

(the “Landeroses”) appeal the district court’s order denying their joint motion for a

preliminary class certification and mooting their joint motion for approval of a

settlement agreement. After reading the parties’ briefs, reviewing the record, and

entertaining oral argument, we discern no abuse of discretion in the district court’s

order. Accordingly, we affirm.

                                    I. BACKGROUND

      The Landeroses, individually and on behalf of all similarly situated

individuals, filed a complaint against Pinnacle alleging violations of the Fair Debt

Collection Practices Act, 15 U.S.C. § 1692, et seq. (the “FDCPA”). The complaint

asserted that the FDCPA violations arose from Pinnacle’s attempts to collect a debt

through a false, misleading, or deceptive communication. The Landeroses

proposed a class that consisted of all persons in the United States who received

from Pinnacle the form collection letter that stated in part:

      Your current real estate interest with Westgate Resorts (our client) is
      current[ly] in the foreclosure process. . . . Failure to respond will
      continue to force the current foreclosure process. If the foreclosure of
      your interest is completed, the foreclosure will be reported to the
      credit bureaus and this “forgiveness of debt” will be reported to the
      Internal Revenue Service (IRS). When a creditor makes such a report,
      you will receive a 1099-C form. The IRS treats the forgiven debt as
      income, on which you may owe income tax.



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(R. Doc. 35 at 15.) The complaint sought statutory damages, plus costs and

attorney’s fees for the Landeroses.

      Following discovery, the parties sought the district court’s approval of a

class action settlement. According to the proposed settlement, Pinnacle

represented that approximately 13,614 letters were mailed during the relevant time.

The Landeroses were to receive $1,250 each, and their attorneys were to receive

$30,000. The proposed settlement allocated $32,500 for the class on a “pro rata”

basis. This figure was the maximum statutory damages recoverable by the class

because it amounted to 1% of Pinnacle’s net worth as of the relevant date. This

sum would result in a payout of approximately $2.39 for each absent class member

if no one opted out of the settlement agreement.

      After receiving the proposed settlement, the district court expressed

reservations about it and ordered a hearing. Before the hearing, the Landeroses

filed a supplemental brief, focusing on the theory that the letter falsely states or

implies that a foreclosure always results in forgiveness of debt and therefore a tax

liability. They also asserted that the letter need only be deceptive as to the least

sophisticated consumer. Following the hearing, the district court denied the

motion for preliminary certification of the class and mooted the proposed




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settlement agreement. The Landeroses appealed, and this court appointed amicus

curiae to defend the district court’s judgment.1

                                      II. DISCUSSION

       Federal Rule of Civil Procedure 23 governs class actions. “A class action

may be maintained only when it satisfies all the requirements of [Rule] 23(a) and

at least one of the alternative requirements of Rule 23(b).” Allapattah Servs., Inc.

v. Exxon Corp., 333 F.3d 1248, 1260 (11th Cir. 2003) (quoting Rutstein v. Avis

Rent-A-Car Sys., Inc., 211 F.3d 1228, 1233 (11th Cir. 2000)). There are four

prerequisites that must be satisfied under Rule 23(a): (1) numerosity; (2)

commonality; (3) typicality; and (4) adequacy of representation. See FED. R. CIV.

P. 23(a). The parties sought certification under Rule 23(b)(3), pursuant to which a

court must make two additional findings. Specifically, the court must consider

whether “the questions of law or fact common to class members predominate over

any questions affecting only individual members” and whether “a class action is

superior to other available methods for fairly and efficiently adjudicating the

controversy.” FED. R. CIV. P. 23(b)(3). “In other words, the issues in the class

action that are subject to generalized proof, and thus applicable to the class as a


1
 Due to the lack of adversarial briefing, this court appointed John C. Neiman, Jr., Esq. as amicus
curiae to advocate for an affirmance of the district court’s judgment. The court thanks and
compliments Mr. Neiman for his exemplary advocacy, both in the written brief and at oral
argument.
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whole, must 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).

      Rule 23(c) directs a district court, “[a]t [the] earl[iest] practicable time after

a person sues or is sued as a class representative, … [to] determine by order

whether to certify the action as a class action.” FED. R. CIV. P. 23(c)(1)(A). While

it is sometimes possible to decide the propriety of class certification from the face

of the complaint, see Mills v. Foremost Ins. Co., 511 F.3d 1300, 1309 (11th Cir.

2008), the Supreme Court has “emphasized that it may be necessary for the court

to probe behind the pleadings before coming to rest on the certification question.”

Comcast Corp. v. Behrend, 569 U.S. ___, 133 S. Ct. 1426, 1432 (2013) (internal

quotation marks omitted). In fact, the determination usually should be predicated

on more information than the complaint itself provides, and it “will frequently

entail overlap with the merits of the plaintiff’s underlying claim.” Id. (internal

quotation marks omitted). After all, “class determination generally involves

considerations that are enmeshed in the factual and legal issues comprising the

plaintiff’s cause of action.” Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338, 351,

131 S. Ct. 2541, 2552 (2011) (quoting Gen. Tel. Co. of Sw. v. Falcon, 457 U.S.

147, 160, 102 S. Ct. 2364, 2372 (1982)).


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       Moreover, “because class actions are an exception to our constitutional

tradition of individual litigation,” Brown v. Electrolux Home Prods., 817 F.3d

1225, 1233 (11th Cir. 2016), a district court has great responsibility to adhere to

the framework of Rule 23. Id. 2 Hence, if the district court has reservations about

whether the Rule 23 requirements have been satisfied, it should refuse to grant

class certification until the parties have assuaged the district court’s doubts. Id. at

1233‒34. We review the district court’s order denying the class certification for

abuse of discretion. See Vega v. T-Mobile USA, Inc., 564 F.3d 1256, 1264 (11th

Cir. 2009).

       On appeal, the Landeroses clarify that they assert one claim and one theory

of relief in their FDCPA action: that the Pinnacle letter characterizes the tax

consequences of a foreclosure and loan forgiveness in a false, deceptive and/or

misleading way in violation of § 1692e. The FDCPA prohibits a debt collector

from using “any false, deceptive, or misleading representation or means in

connection with the collection of any debt.” 15 U.S.C. § 1692e. “The use of ‘or’

in [this provision] means that, to violate the FDCPA, a representation by a ‘debt

collector’ must merely be false, or deceptive, or misleading.” Bourff v. Rubin



2
  In this case, we applaud the district court for expressing its doubts about the propriety of the
class certification and exercising its great responsibility in determining the appropriateness of
class action certification.
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Lublin, LLC, 674 F.3d 1238, 1241 (11th Cir. 2012). “A false representation in

connection with the collection of a debt is sufficient to violate the FDCPA facially,

even where no misleading or deception is claimed.” Id.

      We conclude from the record that the district court correctly declined to

certify the class because it reasoned that whether the contents of the letter were

false, deceptive, or misleading turns on the unique factual circumstances of each

individual who received the letter. In other words, the district court properly

determined that the Landeroses did not satisfy the predominance requirement in

Rule 23. “That common questions of law or fact predominate over individualized

questions means that the issues in the class action that are subject to generalized

proof, and thus applicable to the class as a whole, must predominate over those

issues that are subject only to individualized proof.” Rutstein, 211 F.3d at 1233

(internal quotation marks omitted). These common questions must predominate

such that they “ha[ve] a direct impact on every class member’s effort to establish

liability” that is more substantial than the impact of individualized issues in

resolving the claim or claims of each class member. Klay v. Humana, Inc., 382

F.3d 1241, 1255 (11th Cir. 2004) (citation omitted and alteration in original).

      At the hearing before the district court, the Landeroses’ counsel admitted

that he did not know whether the absent class members had in fact had debt


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forgiven or would have been subject to taxes for any such forgiven debt. In their

briefs on appeal, the parties assert that these statements were still deceptive

because a creditor is not obligated to forgive a deficiency and there are exceptions

regarding the tax liability of debt forgiveness. That may be true as to some class

members’ circumstances, but the Landeroses do not show how the statements are

deceptive as to all class members.

      Furthermore, Pinnacle’s letter made no unqualified or incomplete statement

about what the law required. Rather, the letter made a factual representation that if

one’s interest is foreclosed, this forgiveness of debt will be reported to the IRS.

Pinnacle even added that the debtor may owe income tax as a result. These

statements could accurately describe some of the individual class members’

circumstances, but these statements are not deceptive as to all class members. We

agree with the district court that a determination about whether the contents of the

Pinnacle letter violated the FDCPA is not possible without inquiry into the factual

circumstances of each recipient’s indebtedness and the intentions of Pinnacle as to

that particular recipient. Accordingly, the district court properly denied class

certification because the predominance requirement was not met.

      In an attempt to salvage their FDCPA class action claim and negate the

individualized inquiry, the Landeroses urge the application of the “least


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sophisticated consumer” standard. They contend that under this standard, the least

sophisticated consumer would be deceived by the Pinnacle letter regardless of the

factual circumstances applicable to each recipient of the letter. They argue that the

district court erred by not employing this standard. The district court found that

this standard did not apply in this case because whether the letter was false or

misleading turned on the factual circumstances particular to each recipient. We

agree.

         We adopted the “least sophisticated consumer” standard in Jeter v. Credit

Bureau, Inc., 760 F.2d 1168, 1175 (11th Cir. 1985). See LeBlanc v. Unifund CCR

Partners, 601 F.3d 1185, 1193‒94 (11th Cir. 2010) (“We employ the ‘least-

sophisticated consumer’ standard to evaluate whether a debt collector’s

communication violates § 1692e of the FDCPA.”). Under this standard, the court

should evaluate whether certain statements by debt collectors are deceitful by

considering how the least sophisticated consumer rather than a reasonable

consumer would perceive them. Jeter, 760 F.2d at 1174‒75. Thus, even when a

reasonable consumer would know that a particular statement was false and would

not be deceived by it, the statement can still violate the FDCPA if it would deceive

the least sophisticated consumer. Id. at 1172‒73 (citing Charles of the Ritz Distrib.

Corp. v. FTC, 143 F.2d 676, 679 (2d Cir. 1944)). This standard attempts to strike a


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balance between “protecting naive consumers” and “prevent[ing] liability for

bizarre or idiosyncratic interpretations of collection notices by preserving a

quotient of reasonableness.” LeBlanc, 601 F.3d at 1194 (quoting United States v.

Nat’l Fin. Servs., Inc., 98 F.3d 131, 136 (4th Cir. 1996)). We noted that the least

sophisticated consumer standard will not apply to FDCPA claims in which the

consumer’s sophistication is irrelevant. Jeter, 760 F.2d at 1175. That is the case

here.

        The merits of the Landeroses’ FDCPA claims do not turn on the

sophistication of the person who read the Pinnacle letter. Rather, the merits of the

claims depend on the objective factual circumstances unique to each recipient’s

indebtedness. Pinnacle’s statements about debt forgiveness and the potential tax

consequences would violate the FDCPA because of the fact that Pinnacle did not

intend to report debt forgiveness as to that individual person or because of the fact

that that particular person’s forgiven debt would not be substantial enough to give

rise to taxable income. Thus, the potential falsity or tendency to deceive has

nothing to do with that person’s sophistication. It depends solely upon objective

facts or the intentions of Pinnacle, which may vary from class member to class

member. As such, the least sophisticated consumer standard does not apply in this

case.


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                                   III. CONCLUSION

      The district court did not abuse its discretion in denying the parties’ joint

motion for class certification and mooting their joint motion for approval of a

settlement agreement. The district court properly considered the Rule 23 class

certification requirements and found the parties did not satisfy the predominance

element. The district court also properly declined to apply the least sophisticated

consumer standard to the FDCPA claims. Accordingly, we affirm the district

court’s order.

      AFFIRMED.




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