Strict Opt-Out Formalities, Class-Action Preclusion, and No Automatic Vacatur After § 455 Recusal: A Commentary on Davis v. CenturyLink (5th Cir. Apr. 4, 2025)

Note: The Fifth Circuit designated the opinion “not for publication” under 5th Cir. R. 47.5. Even so, the court’s analysis reinforces and clarifies existing doctrines in three recurring areas: (1) when recusal under 28 U.S.C. § 455 warrants vacatur of prior rulings, (2) how class-action settlements preclude later individual suits and the strictness of opt-out requirements, and (3) pleading and statutory limits in consumer-protection claims against upstream principals.

Introduction

This appeal stems from a pro se attorney-plaintiff’s effort to revisit losses in two prior federal cases by suing her telecommunications providers. Veronica L. Davis, a Texas lawyer, previously represented the Charlie Brown Heritage Foundation and Jeff Kitchen in separate suits in the Southern District of Texas. Both cases ended in summary judgment after the district court struck late-filed evidence that Davis attempted to submit. The Fifth Circuit affirmed those rulings, describing the district court’s decision to strike the late filings as “entirely appropriate.”

In this new case, Davis and her former clients (as co-plaintiffs) sued CenturyTel entities (internet/phone), DirecTV (satellite television), and AT&T (DirecTV’s parent), alleging that “faulty” CenturyTel internet caused her late filings and ensuing defeats, and that DirecTV/AT&T mishandled her account and debt-related issues. The district court granted CenturyTel summary judgment on claim-preclusion grounds (based on the nationwide In re CenturyLink Sales Practices & Securities Litigation class settlement), dismissed the DirecTV/AT&T claims under Rule 12(b)(6), and refused to vacate earlier magistrate-judge rulings after the magistrate recused.

On appeal, Davis raised three principal issues: (1) whether all rulings by the magistrate judge must be vacated after his recusal under 28 U.S.C. § 455; (2) whether her claims against CenturyTel are barred by claim preclusion due to the CenturyLink settlement; and (3) whether the dismissal of her DirecTV/AT&T claims should be reversed. The Fifth Circuit affirmed across the board.

Summary of the Opinion

• No vacatur after recusal: Applying the Liljeberg three-factor test (risk of injustice in the case, risk of injustice in other cases, and risk to public confidence), the court held that vacatur was unwarranted. The dispositive issues received de novo review by both the district judge and the Fifth Circuit; a trial never occurred; and no prejudice was shown.
• CenturyLink class-settlement preclusion: Davis was a member of the class and received payment. Her “contingent” opt-out embedded with her claim form did not comply with the settlement’s unequivocal, signed opt-out requirement, and a later email (post-final judgment) was too late. Under the transactional test, her current claims arise from the same nucleus of operative facts as the class action and are therefore barred by res judicata.
• DirecTV/AT&T dismissal: The court affirmed dismissal for failure to state a claim. Davis’s agency allegations were conclusory, the FDCPA did not reach DirecTV or AT&T as “debt collectors,” her FCRA theory did not state a private cause of action as pleaded, and the TDTPA claim was time-barred. On appeal, Davis did not meaningfully challenge the district court’s reasons, resulting in affirmance.
• Forfeiture of co-plaintiffs’ appeal: The Foundation’s and Kitchen’s issues were inadequately briefed in the opening brief and treated as forfeited.

Detailed Analysis

I. Vacatur After Magistrate-Judge Recusal: De Novo Review Cures, Absent Prejudice

What happened: The district judge had referred non-dispositive matters and dispositive recommendations to a magistrate judge under 28 U.S.C. § 636(b). After the magistrate issued two reports and recommendations (R&Rs) and entered an order disqualifying Davis from acting as trial counsel under Texas Rule 3.08 (lawyer-as-witness), he recused himself under § 455(b)(1) due to prior involvement in settlement efforts in one of Davis’s earlier cases. Davis then moved to vacate all of the magistrate’s rulings and recommendations. The district judge denied the motion.

How the Fifth Circuit reviewed it: Construing the motion as one under Rule 60(b)(6), the court applied the Supreme Court’s Liljeberg factors, as adopted in Fifth Circuit precedent, to assess whether vacatur was warranted after recusal:

• Risk of injustice to the parties: Minimal. The dispositive matters were subject to de novo review—first by the district judge when adopting the R&Rs, and again by the Fifth Circuit on appeal. As the panel affirmed on the merits, vacatur and remand would accomplish little more than reinstating the same rulings. The disqualification order caused no prejudice because the case never went to trial.
• Risk of injustice in other cases: None identified by Davis and none apparent from the record.
• Risk of undermining public confidence: None sufficient to outweigh the lack of prejudice and the corrective function of de novo review.

Key takeaway: Where dispositive recommendations have been and can be reviewed de novo by an Article III judge—and then by an appellate court—recusal under § 455 does not require wholesale vacatur of pre-recusal rulings absent concrete prejudice. This affirms efficient use of § 636 referrals and curbs strategic attempts to reset proceedings through post hoc recusal motions.

Precedents and authorities driving the result

• Liljeberg v. Health Services Acquisition Corp., 486 U.S. 847 (1988), and Travelers Ins. Co. v. Liljeberg Enters., Inc., 38 F.3d 1404 (5th Cir. 1994) (three-factor vacatur test after § 455 violations).
• Patterson v. Mobil Oil Corp., 335 F.3d 476 (5th Cir. 2003), and In re Roman Catholic Church of Archdiocese of New Orleans, 101 F.4th 400 (5th Cir. 2024) (little is gained by vacatur where de novo review applies and affirmance is warranted).
• Street v. BP Exploration & Production, Inc., 85 F.4th 266 (5th Cir. 2023) (no injustice to parties given de novo appellate review of summary judgment).
• 28 U.S.C. § 636(b)(1) (magistrate judge referrals; de novo district judge review of dispositive R&Rs); 28 U.S.C. § 455(b)(1) (recusal for personal knowledge of disputed facts).

II. Class-Action Settlement Preclusion and Strict Opt-Out Compliance

What happened: Davis’s current complaint mirrors claims in the nationwide CenturyLink multidistrict litigation (MDL) settlement over alleged bait-and-switch tactics, billing inaccuracies, unauthorized charges, and service deficiencies. The settlement class covered CenturyLink/CenturyTel customers from January 1, 2014 through January 24, 2020 (the date of preliminary approval). Davis received class notice, submitted a claim for herself and for the very losses she attributed to the Foundation and Kitchen, and received a payment. She did not validly opt out.

Her opt-out arguments failed for two independent reasons:

• No unequivocal, signed opt-out: Davis appended an “Original Complaint” to her claim form that purported to seek a “contingent” exclusion if any of her asserted causes of action exceeded the settlement’s scope. The preliminary approval order required an unambiguous, individually signed request stating the member “does not wish to participate in the Settlement.” Ambiguity and conditions are fatal.
• Too late and inconsistent: Submitting a claim under the settlement while attempting to opt out undermines exclusion under the settlement’s terms. An additional email sent months after entry of final judgment was untimely.

Why preclusion applied

Applying federal common law of claim preclusion, the court found the familiar elements satisfied:

• Same parties or their privies: The defendants were “Released Parties” under the CenturyLink settlement, and Davis was a settlement class member who received compensation.
• Prior final judgment on the merits by a court of competent jurisdiction: The MDL court entered a final approval order and final judgment under Rule 23(e).
• Same claim/transactional nucleus: Davis’s current claims track the MDL allegations, arise from the same conduct/time period, and could have been—or in substance were—advanced there. The Fifth Circuit’s transactional test does not require complete identity of legal theories.

The court also noted that properly approved federal class settlements can release state-law claims and that future litigation following a class settlement is governed by preclusion doctrine, not by direct enforcement of the settlement contract.

Precedents and authorities driving the result

• Allen v. McCurry, 449 U.S. 90 (1980) (claim preclusion bars matters that were or could have been raised).
• Retractable Technologies, Inc. v. Becton Dickinson & Co., 842 F.3d 883 (5th Cir. 2016); Petro-Hunt, L.L.C. v. United States, 365 F.3d 385 (5th Cir. 2004) (transactional “same nucleus of operative facts” test).
• Oreck Direct, LLC v. Dyson, Inc., 560 F.3d 398 (5th Cir. 2009) (claims that could have been advanced are barred).
• In re Deepwater Horizon, 819 F.3d 190 (5th Cir. 2016) (no “intuiting” opt outs; strict compliance prevents gamesmanship), and 2021 WL 3501651 (5th Cir. Aug. 9, 2021) (enforcing “wet-ink” requirement).
• In re CenturyLink Sales Practices & Securities Litigation, 2020 WL 3513547 and 2020 WL 3512807 (D. Minn. June 29, 2020); 2020 WL 7133805 (D. Minn. Dec. 4, 2020) (class certification, notice adequacy, and opt-out enforcement).
• In re Corrugated Container Antitrust Litigation, 643 F.2d 195 (5th Cir. 1981) (federal court approving class settlement may release related state-law claims).
• Newberg on Class Actions § 18.19 (6th ed. 2022) (post-settlement litigation turns on preclusion, not the settlement contract itself).

Procedural nuance: Res judicata at the Rule 12 stage

Although res judicata is an affirmative defense, the magistrate judge converted CenturyTel’s Rule 12(b)(6) motion to summary judgment after giving Davis an opportunity to respond with evidence. The Fifth Circuit approved this approach, citing longstanding circuit precedent that such conversion cures the typical bar against resolving claim preclusion on a bare motion to dismiss.

III. The DirecTV/AT&T Claims: Pleading Agency, Statutory Coverage, and Limitations

What happened: Davis sought to hold DirecTV and AT&T vicariously liable for conduct by CenturyTel and third-party debt collectors. The district court dismissed the complaint under Rule 12(b)(6). On appeal, Davis did not substantively engage with the district court’s reasons, and the Fifth Circuit affirmed.

Key deficiencies (each independently sufficient):

• Agency conclusoriness: Simply asserting or asking the court to “assume an implied agency” fails under Twombly/Iqbal. Plaintiffs must plead facts showing the nature of the principal-agent relationship and the acts within the scope of authority.
• FDCPA non-coverage: The statute applies to “debt collectors,” i.e., entities whose principal business is collecting debts owed to others or who regularly do so. DirecTV and AT&T were not alleged to be “debt collectors.”
• FCRA private-right limits (as pleaded): The district court concluded that the FCRA theory asserted did not provide a private right of action in the manner pleaded by Davis, and she did not contest that conclusion on appeal.
• TDTPA limitations: The Texas Deceptive Trade Practices Act carries a two-year statute of limitations; Davis did not offer a viable tolling or accrual argument.

Precedents and authorities driving the result

• Ashcroft v. Iqbal, 556 U.S. 662 (2009); Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007) (conclusory assertions do not state a claim).
• Christiana Trust v. Riddle, 911 F.3d 799 (5th Cir. 2018) (conclusory vicarious-liability allegations insufficient).
• 15 U.S.C. § 1692a(6) (FDCPA definition of “debt collector”).
• Tex. Bus. & Com. Code § 17.565 (TDTPA limitations).
• Appellate briefing standards and forfeiture: Guillot ex rel. T.A.G. v. Russell, 59 F.4th 743 (5th Cir. 2023); Cinel v. Connick, 15 F.3d 1338 (5th Cir. 1994); Fed. R. App. P. 28(a)(8)(A).

Important nuance on the FCRA: The FCRA does provide private rights of action for certain violations and entities (e.g., willful or negligent noncompliance by consumer reporting agencies or furnishers under specific provisions). But some duties—such as a furnisher’s duties under 15 U.S.C. § 1681s-2(a)—do not carry a private right. The panel did not reach the merits of which provision might apply because Davis failed to contest the district court’s conclusion on appeal.

IV. Additional Appellate Points

• Forfeiture by inadequate briefing: The Foundation’s and Kitchen’s claims were effectively not appealed because the opening brief did not assign or develop errors as to those claims. Raising new arguments in a reply brief is too late.
• Texas Rule 3.08 (lawyer-as-witness): The magistrate’s order disqualifying Davis as trial counsel had no operative effect because the case never reached trial; thus, no prejudice supported vacatur.

Impact and Practical Implications

1. Recusal and Vacatur

The decision reinforces that vacatur after a § 455 recusal is not automatic. When the contested matters are subject to de novo review (as with dispositive R&Rs), the combination of district judge and appellate de novo review can cure any fairness concerns, especially where no trial occurred and no concrete prejudice is shown. Litigants should think carefully before seeking wholesale vacatur after a magistrate’s recusal; courts will weigh Liljeberg factors and judicial economy.

2. Class Settlements: Opt-Out Strictness and Preclusion

For absent class members, this case is a cautionary tale:

• Opt-outs must be unequivocal, personally signed, and timely under the settlement’s terms and the court’s orders; “contingent” language is insufficient.
• Submitting a claim and then attempting to opt out (or vice versa) can doom exclusion efforts under settlement terms.
• Courts—especially in massive classes—will not parse ambiguous filings for an “implied” opt out. This deters gamesmanship and promotes finality.

For defendants, the decision underscores the durable preclusive effect of final class settlements: later individual suits that reprise the same operative facts are barred, even if styled under different legal theories or state law.

3. Pleading Against Upstream Principals

Agency-based liability requires well-pleaded facts showing how the principal-agent relationship operated and how the conduct fell within the scope of that relationship. Broad labels, industry “bundling,” or corporate affiliation alone will not satisfy Twombly/Iqbal. Consumer claims must also match the scope of the statutes invoked (e.g., FDCPA’s “debt collector” limitation; the specific FCRA provisions conferring private rights of action) and heed statutes of limitation.

Complex Concepts Simplified

• 28 U.S.C. § 455 Recusal: Requires judges to step aside when their impartiality might reasonably be questioned or when they have personal knowledge of disputed evidentiary facts. Recusal does not automatically erase prior rulings; courts balance fairness, broader justice, and public confidence when deciding whether to vacate.
• Rule 60(b)(6): A catch-all provision allowing relief from a judgment for “any other reason that justifies relief.” It is extraordinary and applied sparingly.
• Magistrate R&Rs and De Novo Review: Under § 636(b)(1), a magistrate may recommend outcomes on dispositive motions, but the district judge must review de novo any contested portions. That independent review can mitigate concerns later raised about the magistrate’s role.
• Claim Preclusion (Res Judicata): Prevents relitigation of claims that were or could have been raised in a prior action with a final judgment. The Fifth Circuit uses the “transactional” approach: if claims share a common nucleus of facts, they are the same claim for preclusion purposes.
• Class Settlement Opt-Outs: To preserve the right to sue individually later, a class member must follow the settlement court’s opt-out instructions to the letter (timely, unequivocal, and properly executed). Ambiguity or delay defeats opt-out status.
• Rule 12(b)(6) vs. Summary Judgment: Courts may convert a motion to dismiss into one for summary judgment when considering materials outside the pleadings, provided parties get notice and a chance to respond.
• Pleading Agency: Vicarious liability requires factual allegations establishing the agency relationship and scope of authority; conclusory assertions are insufficient.
• FDCPA “Debt Collector” Limitation: The statute typically targets third-party debt collectors, not original creditors or entities outside the business of collecting debts owed to another.
• FCRA Private Rights of Action: The FCRA authorizes private suits for certain violations (e.g., negligent or willful noncompliance by CRAs or furnishers under specific sections), but not all provisions are privately enforceable. Identifying the correct statutory hook is essential.
• TDTPA Two-Year Limitations: Texas deceptive trade practices claims generally must be filed within two years of the false, misleading, or deceptive act or within two years of when it should have been discovered.

Conclusion

Davis v. CenturyLink affirms three practical propositions that will resonate in federal practice:

• Recusal does not equal reset: When dispositive matters receive de novo review and no trial prejudice exists, courts need not vacate pre-recusal rulings under § 455.
• Class settlements mean finality—if you don’t clearly opt out: Ambiguous or belated opt-out attempts (especially those paired with claims for payment) will not defeat the binding effect of a Rule 23(e) final judgment. Subsequent suits based on the same transaction are precluded.
• Plead with facts, match the statute, mind the clock: Agency-based theories must be factually supported; statutes like the FDCPA and FCRA have specific coverage and remedial limits; and state-law consumer claims are subject to strict limitation periods.

Although unpublished, the opinion synthesizes and applies settled Fifth Circuit and Supreme Court authority in a way that provides clear guidance to litigants on post-recusal remedies, the rigor of class-action opt-out procedures, and the disciplined pleading required in consumer-protection suits against corporate parents and affiliates.