Improper Claim-Splitting Warrants Dismissal

In a case of first impression, the Eleventh Circuit has held that a plaintiff’s second case against a defendant, arising out of the same nucleus of operative facts, was properly dismissed as the product of improper claim-splitting. Vanover v. NCO Fin. Servs., Inc., 2017 WL 2129557 (11th Cir. May 17, 2017).

In 2014, Karen Vanover sued NCO Financial Systems in federal court, claiming that NCO violated the Telephone Consumer Protection Act (“TCPA”) in its attempts to collect medical debts from her. Her complaint referred to alleged telephone calls between April 2013 and April 2014.  NCO moved for summary judgment.  A week later, Vanover filed a second case against NCO in Florida state court, alleging violations of the TCPA, the Fair Debt Collection Practices Act, and Florida law, based on alleged telephone calls between April 11, 2010 and April 2013.  The second complaint did not allege that the debts at issue in the second case were different than those in the first case.  NCO removed the second case to federal court and moved to dismiss it, arguing that the second action was the product of improper claim-splitting.

In response, Vanover sought to add two additional defendants to the second case, claiming they were necessary parties or at least eligible for joinder. Vanover claimed that NCO and the proposed new defendants operated out of the same call center and that one of them directed the actions of the other two.  The district court denied the joinder motion and granted NCO’s motion to dismiss the second case with prejudice.  Vanover appealed.

The Eleventh Circuit, in an opinion written by Judge Paul Byron visiting from the Middle District of Florida and joined by Judges Tjoflat and Hull, first reviewed the district court’s decision to deny the motion to join additional defendants. The proposed new defendants were not necessary parties, the court found, because Vanover “failed to demonstrate that she could not obtain full relief from NCO for money damages” without them.  And the denial of Vanover’s request for permissive joinder was within the district court’s “broad discretion,” because “Vanover’s failure to timely amend her Complaint in [the first case] to include [other defendants] does not justify subjecting NCO to duplicative litigation.”

The court also affirmed the dismissal of the second action on claim-splitting grounds. Noting that the issue was one of first impression in the Eleventh Circuit, the court agreed with the following standard announced by the Tenth Circuit:  claim-splitting occurs when “the first suit, assuming it were final, would preclude the second suit.”  And the district court properly applied a two-factor test to make that determination, analyzing “(1) whether the case involves the same parties and their privies, and (2) whether separate cases arise from the same transaction or series of transactions.”  Moreover, “[s]uccessive cause[s] of action aris[e] from the same nucleus of operative facts.”

In the case at hand, the district court properly found that the two cases arose from the “same nucleus of operative facts”—the attempt to collect the medical debts. The fact that the second case involved additional legal claims—under the FDCPA and Florida law—did not change that conclusion.  And given that the phone calls challenged in the first and second cases were “based upon the same collection efforts,” “splitting the time frame into two different periods does not create a separate transaction.”

Posted by Valerie Sanders.

Back to top