United States District Court, D. Nebraska
KELLY M. BASSETT, individually and as heir and Personal Representative of the Estate of James M. Bassett, on behalf of herself and all others similarly situated; Plaintiff,
CREDIT MANAGEMENT SERVICES, INC., and JASON MORLEDGE, Defendants.
MEMORANDUM AND ORDER
F. BATAILLON, SENIOR UNITED STATES DISTRICT JUDGE
matter is before the court on the plaintiff's motions to
certify a class, Filing No. 49 and to exclude expert
testimony under Daubert v. Merrell Dow Pharms.,
Inc., 509 U.S. 579, 592-93 (1993), Filing No.
This is a putative class action for violations of the Fair
Debt Collection Practices Act, (“FDCPA”) 15
U.S.C. §1692 et seq., and the Nebraska Consumer
Protection Act, Neb. Rev. Stat. § 59-1601 et
behalf of herself and others similarly situated and as
personal representative of her deceased husband's estate,
plaintiff Kelly M. Bassett alleges defendant CMS wrongfully
and deceptively miscast its cause of action in county court
cases in order to obtain attorney fees under Neb. Rev. Stat.
§ 25-1801, wrongfully sought and obtained fees for
in-house counsel, and wrongfully collected and kept
prejudgment interest and attorneys' fees as undisclosed
collection fees. She alleges that CMS's conduct violated
of 15 U.S.C. § 1692e (prohibiting false, misleading, or
deceptive representations), § 1692e(2)(A) (prohibiting
false representation of the character, amount, or legal
status of any debt); § 1692e(2)(B) (prohibiting false
representation of services rendered or compensation which may
lawfully be received by any debt collector for the collection
of a debt), § 1692e(5) (prohibiting a “threat to
take any action that cannot legally be taken or that is not
intended to be taken”), § 1692e(10) (prohibiting
“[t]he use of any false representation or deceptive
means to collect or attempt to collect any debt or to obtain
information concerning a consumer”), § 1692f
(prohibiting the use of “unfair or unconscionable means
to collect or attempt to collect any debt.”); and
§ 1692f(1)(prohibiting “[t]he collection of any
amount (including any interest, fee, charge, or expense
incidental to the principal obligation) unless such amount is
expressly authorized by the agreement creating the debt or
permitted by law” and Neb. Rev. Stat. § 59-1602.
moves for certification of a class pursuant to Fed.R.Civ.P.
23(a) and 23(b)(3) defined as follows:
(i) all persons with addresses in Nebraska;
(ii) to whom Defendants sent or served, or caused to be sent
or served, a county court collection complaint in the form of
Exhibit A (Filing No. 1-1);
(iii) in an attempt to collect an alleged unpaid medical
(iv) which requested an award of statutory attorneys'
fees and/or prejudgment interest pursuant to Neb. Rev. Stat.
record shows that the time period involved is from March 4,
2016 to June/July 2016, which is the period of time that CMS
filed the subject form collection complaints. In support of
her motion, the plaintiff has shown that during that time
defendant CMS used a standard form template complaint similar
to Exhibit A when suing Nebraska residents in Nebraska County
Courts. Filing No. 51-7, Ex. 4B, Deposition of Tessa Stevens
(“Stevens Dep.”) at 7, 27-28, 30-31; Filing No.
51-12, Ex. 5A, Deposition of Dana Fries (“Fries
Dep.”), at 22-23; Filing No. 51-15, Ex. 5C, Deposition
of Steven Morrison (“Morrison Dep.”) at 40-41.
CMS used this standard form complaint in 3, 800 Nebraska law
suits against between 4, 000 and 6, 000 Nebraska residents
during that time frame. Filing No. 51-7, Ex.4B, Stevens Dep.
at 29-30. In each of these cases, CMS relied on quantum
meruit as its theory of recovery. Id. at
28-30.; Filing No. 51-12, Ex.5A, Fries Dep. at 22-23; Filing
No. 51-13, Ex. 5B, Deposition of Megan Bischoff
(“Bischoff Dep.”) at 17-20, 26-28; Filing No.
51-15, Ex.5C Morrison Dep. at 37-39).
relies on Neb. Rev. Stat. § 25-1801 as authority for its
demand for payment of attorney fees and prejudgment interest
in collecting these county court cases. Filing No. 51-7,
Ex.4B, Stevens Dep. at 45-49; Filing No. 51-12, Ex.5A, Fries
Dep. at 22-26; Filing No. 51-13, Ex.5B, Bischoff Dep. at
23-24; Filing No. 51-15, Ex.5C Morrison Dep.at 29, 44-45.
CMS's in-house counsel sign and file the template
complaints. Filing No. 51-7, Ex.4B, Stevens Dep. at 8-9, 65;
Filing No. 51-6, Ex.4A, Deposition of Jason Morledge,
(“Morledge Dep.”) at 77-79; Filing No. 51-12,
Ex.5A Fries Dep. at 22-23; Filing No. 51-13, Ex.5B, Bischoff
Dep. at 4-7; Filing No. 51-15, Ex.5C, Morrison Dep. at 10-11.
CMS's in-house counsel are paid a straight salary and do
not receive the statutory attorney fees CMS collects. Filing
No. 51-7, Ex. 4B, Stevens Dep. at 53; Filing No. 51-18, Ex.
6, Answers to Requests for Admission (“RFA”) at
2-3. CMS does not pay any portion of the attorney fees or
prejudgment interest collected under Neb. Rev. Stat. §
25-1801 to original creditors. Filing No. 51-2, Ex. 2,
Affidavit of Kenneth King, (“King Aff.”); Filing
No. 51-18, Ex. 6, RFA at 6-7. CMS keeps the money collected
for costs, fees, and interest under Neb. Rev. Stat. §
25-1801. Filing No. 51-7, Ex.4B, Stevens Dep. at 49-50. The
fees and interest collected under Neb. Rev. Stat. §
25-1801 go directly into CMS's bank account. Id.
at 50-51. CMS's general policy is to apply consumers'
postjudgment payments to costs, interest, and attorney fees
before sending any payment to the original creditor for its
share of the principal debt. Id. at 52; Filing No.
51-18, Ex. 6, RFA at 2.
Medical Center (hereinafter “FMC”) is one of
CMS's clients. Filing No. 51-7, Ex.4B, Stevens Dep. at
52-53. Kenneth King, custodian of records and manager of
patient financial services for FMC, states in his declaration
that CMS provides extensive reports to FMC on a regular
basis. Filing No. 51-2, Ex.2, King Decl. at 2. In addition,
Fremont Medical Center produced over 1, 400 pages of
documentation reports and records about specific accounts
from CMS. Id., Ex. A. These reports include the
names of the consumer, the amount collected for each, the
split of the share between CMS and FMC and the total
collected. See, e.g., id., King Decl. at 1; Filing
No. 51-3, CMS reports (representative sample with consumer
names redacted). The judgment in favor of CMS and against the
plaintiff was in the amount of $2, 643.07 for the underlying
debt, costs in the amount of $69.16, prejudgment interest in
the amount of $72.99, attorney's fee of $269.30, and
post-judgment interest at 2.391%. Filing No. 1-1, Ex. E.
opposition to the motion, the defendants argue that the
plaintiff seeks a second bite at the apple and wants to
relitigate the prior state court lawsuit and “undo a
prior judgment[.]” Filing No. 53, Response at 2. They
argue class certification is not appropriate because
individualized determinations are necessary with respect to
the underlying Nebraska County Court cases. Further, they
argue that the plaintiff is not a proper representative of
connection to their opposition to the plaintiff's motion
for class certification, the defendants offer a purported
expert opinion from retired Nebraska County Court Judge
Philip Martin regarding the accepted community practices and
relevant standard of care for attorneys filing pleadings such
as the one at issue in this case. Judge Martin was asked
“to provide comment and opinion concerning the
customary standards and practices in Nebraska County Courts
regarding the manner in which creditors, assignees and
collection attorneys plead claims for interest and fees under
Neb. Rev. Stat. § 25-1801, and the customary standards
applied by County Judges in ruling on such claims.”
Filing No. 54-2, Expert Report of Hon. Philip Martin at 3.
Martin concludes that “the pleadings at issue in the
underlying Bassett case are readily understandable to [him]
to as a recently retired Hall County Judge, ” and in
[his] opinion, the complaints at issue are “(if
anything) more detailed and technically precise than most
such pleadings I have reviewed in collection cases venued in
Hall County over my 25 years on the bench” and further
that “it does not appear to [him] that those pleadings
were inconsistent with the facts, or with the standards as
commonly applied in Hall County over the last 25
years.” Id. at 7. He also states “it was
well known in Hall County throughout the years in which I
served as a Judicial Officer that Credit Management Services,
Inc. appeared in County Courts through in-house lawyers
employed by the company, ” and that he and other county
court judges awarded attorneys' fees to in-house counsel
in the belief the awards were consistent with Nebraska law
and community standards. Id. at 8-9.
plaintiff moves to exclude Judge Martin's report,
contending that Martin's testimony is not relevant to any
issue, nothing in his conclusions is helpful to the court,
and he is not qualified to testify to issues involving the
FDCPA. She argues that the testimony includes legal
conclusions and opinions on matters on which Judge Martin is
not qualified as an expert.
Rule of Evidence 702 allows for the admission of expert
opinions. Under Rule 702, A witness who is qualified as an
expert by knowledge, skill, experience, training, or
education may testify in the form of an opinion or otherwise
(a) the expert's scientific, technical, or other
specialized knowledge will help the trier of fact to
understand the evidence or to determine a fact in issue;
(b) the testimony is based on sufficient facts or data;
(c) the testimony is the product of reliable principles and