A federal appeals court has decertified a class action brought under the federal Fair Debt Collection Practices Act after finding that the lead plaintiff had no claims that were common or typical to the class.

The U.S. Court of Appeals for the Fifth Circuit ruled Wednesday that a district judge should not have certified a Texas class of 7,650 customers of Seton Medical Center Hays who received letters from a debt collection services provider. The panel, two of whom are appointees of President Donald Trump, found there were too many variances in how Seton's customers might have interpreted the letter to establish a common issue, as required under the federal Rule 23 of Civil Procedure.

"As the Supreme Court explained in Dukes, commonality requires more than a shared cause of action or common allegation of fact—it requires a common legal contention capable of class-wide resolution," wrote Judge James Ho, whom Trump nominated for the bench in 2018, referencing the U.S. Supreme Court's 2011 opinion in Wal-Mart Stores Inc. v. Dukes. "Every member of the putative class received the same allegedly threatening letter from Medicredit. But the FDCPA penalizes empty threats, not all threats. So the letter alone is insufficient to certify a class."

The ruling is a rare appeals court decision on class certification in a case that, according to the defendant's appeal brief, "presents novel questions about he interplay of class action procedure and the Fair Debt Collection Practices Act that have not been addressed by this court nor, to the best of counsel's knowledge, any other U.S. Court of Appeals."

Maura Kathleen Monaghan, a partner at New York's Debevoise & Plimpton, who represented defendants Medicredit Inc., the debt collection service provider, and its surety bondholder, Fidelity and Deposit Co. of Maryland, declined to comment.

Plaintiffs attorney Robert Zimmer, of Zimmer & Associates in Austin, did not respond to a request for comment.

Nina Flecha filed the class action in 2016 after she received a letter from Medicredit that she believe threatened legal action. The letter said, "At this time, a determination must be made with our client as to the disposition of your account. Your failure to cooperate in satisfying this debt indicates voluntary resolution is doubtful."

Under the Fair Debt Collections Practices Act, a company must not "false, deceptive, or misleading" representations, such as false legal threats. According to Flecha, Medicredit does not file lawsuits to collect payments. A Seton representative, however, told Flecha in a telephone call that a lawsuit was a possibility.

In court documents, Zimmer referred to Medicredit's argument as "frivolous" and based on an "erroneous view of the law."

But Medicredit argued that Flecha's fear of legal action was based on the Seton telephone call, not the wording in the letter.

The Fifth Circuit concluded that she provided no evidence about Seton's debt collection practices that might reveal whether it actually intended to sue her. U.S. District Judge Lee Yeakel, of the Western District of Texas, also had wrongly presumed, for the purpose of class certification, that Seton's potential legal action was a veiled threat because Medicredit didn't sue its customers.

"But courts must certify class actions based on proof, not presumptions," Ho wrote.

The panel, citing Supreme Court precedent, did not rule on Medicredit's alternative argument that unnamed class members who suffered no injuries lacked standing to sue under Article III of the U.S. Constitution. But Ho wrote that there were "substantial questions" about standing in the case. "Countless unnamed class members lack standing," he wrote, such as those who threw away the letter assuming it was junk mail.

In a concurring opinion, Judge Andy Oldham, another 2018 Trump appointee, said standing issues should apply at the class certification stage.

"In my view, that lack of standing is sufficient to decide the case," he wrote.