No. 24-1786 ___________________________

Diana Delgado

Plaintiff - Appellant

v.

Midland Credit Management, Inc.

Defendant - Appellee ____________

Appeal from United States District Court for the District of Minnesota ____________

Submitted: December 18, 2024 Filed: March 21, 2025 ____________ Before SMITH, GRUENDER, and STRAS, Circuit Judges. ____________ STRAS, Circuit Judge.

We must decide whether a Minnesota state-court default judgment can bind the parties in a later federal lawsuit. Like the district court, 1 we conclude it can.

1 The Honorable Eric C. Tostrud, United States District Judge for the District of Minnesota. I.

Diana Delgado owed money on a department store credit card. Midland Credit Management, Inc., bought the debt and then sued in Minnesota state court to collect it. Delgado failed to respond to the summons or participate in any way, so the court administrator entered a default judgment at Midland’s request. See Minn. Stat. § 485.01 (explaining that the “clerk of the district court” is “known as the court administrator”). Getting it required Midland to show how it acquired the debt. See id. § 548.101(a)(5) (requiring “evidence establishing a valid and complete chain of assignment of the debt from the original creditor to the party requesting judgment” in a consumer-debt-collection action).

Rather than seeking reconsideration or appealing the default judgment, Delgado filed her own lawsuit against Midland in federal court, which alleged several violations of the Fair Debt Collection Practices Act. See 15 U.S.C. §§ 1692e–f. One was that it had tried to collect the debt without owning it.

The district court disagreed and dismissed her case. See Fed. R. Civ. P. 12(c). As relevant here, it concluded that the question of who owned the debt had already been answered in the state-court action, so it gave the default judgment issue- preclusive effect. On appeal, our task is to determine whether an issue decided by a default judgment can be “conclusive in a subsequent action between the parties.” Twin City Pipe Trades Serv. Ass’n v. Wenner Quality Servs., Inc., 869 F.3d 672, 676 (8th Cir. 2017) (quoting B&B Hardware, Inc. v. Hargis Indus., Inc., 575 U.S. 138, 148 (2015)).

II.

We review this legal question de novo and “give preclusive effect to [a] state- court judgment[] whenever the courts of the [s]tate from which [it] emerged would do so.” Laase v. County of Isanti, 638 F.3d 853, 856 (8th Cir. 2011) (quoting Allen v. McCurry, 449 U.S. 90, 96 (1980)). In other words, when deciding whether -2- collateral estoppel applies, we are “bound by the decisions of the Minnesota Supreme Court.” Great W. Cas. Co. v. Decker, 957 F.3d 910, 913 (8th Cir. 2020) (citation omitted).

A.

One answers the question. In Herreid v. Deaver, the Minnesota Supreme Court held that a default judgment “stands as . . . a final determination of the facts essential to its existence” and is “conclusive upon the parties” in later cases, even if the defendant “took no part” in the proceedings. 259 N.W. 189, 190–91 (Minn. 1935). The Minnesota Court of Appeals has since relied on Herreid to “apply[] collateral estoppel to those claims determined [by a] previous default judgment.” Roberts v. Flanagan, 410 N.W.2d 884, 886–87 (Minn. Ct. App. 1987).

Here, both of Herreid’s box